Changes Ahead for Louisiana Mechanic’s Lien Rights

Changes Ahead for Louisiana Mechanic’s Lien Rights

It’s hard to believe we are only a few months away from the year 2020! 2020 will be a BIG year, not only for NCS (we’re turning 50!) but also for states with changes to mechanic’s lien and bond claim statutes; states like Louisiana.

Louisiana’s 2019 legislative session included the passage of HB 203, which becomes effective 1/1/2020. Let’s review one of the statute changes: the calculation of mechanic’s lien deadlines.

Current Mechanic’s Lien Deadlines

Louisiana has this tricky thing about its mechanic’s lien deadlines; the lien deadline is calculated by a combination of varying factors. Factors include whether the project is residential, whether a Notice of Contract was recorded, where you are in the ladder of supply, if/when a Notice of Termination is filed, or the date of substantial completion or abandonment of the project.

For example, under current statute, if you are the prime contractor, your lien should be filed within 60 days after a Notice of Termination, or if no Notice of Termination has been filed, within 60 days from substantial completion or abandonment.

If you are a subcontractor or material supplier, there is an additional layer: whether a Notice of Contract was recorded.

  • Notice of Contract has been recorded:
    • File the lien within 30 days after a Notice of Termination is filed.
  • Notice of Contract has not been recorded:
    • On commercial projects, file the lien within 60 days after a Notice of Termination or substantial completion or abandonment of the project, if no Notice of Termination is filed.
    • On residential projects, file the lien within 70 days after a Notice of Termination or substantial completion or abandonment of the project if no Notice of Termination is filed.

So, under current law, your mechanic’s lien deadline could be 30 days, 60 days, or 70 days.

2020 Mechanic’s Liens Deadlines

Under the new statute:

  • Notice of Contract has been recorded:
    • Prime contractors: File the lien within 60 days after a Notice of Termination is filed, or, if no Notice of Termination is filed, within 7 months after substantial completion of abandonment of work.
    • Subcontractors or material suppliers: File the lien within 30 days after a Notice of Termination is filed, or, if no Notice of Termination is filed, within 6 months after substantial completion or abandonment of work.
  • Notice of Contract has not been recorded:
    • On commercial projects, file the lien within 60 days after a Notice of Termination, or, if no Notice of Termination is filed, within 60 days after substantial completion or abandonment of the project.
    • On residential projects, file the lien within 70 days after a Notice of Termination, or if no Notice of Termination is filed, within 70 days after substantial completion or abandonment of the project.

This is text from the House Bill, in which legislators explain the change:

“It should be recognized, however, that the new six-month period is by no means a lengthening of the period permitted for filing statements of claim or privilege. It is, instead, the imposition of an outside deadline where none previously existed. If [a Notice of Contract was filed], a statement of claim or privilege filed more than thirty days after the filing of Notice of Termination is untimely. If [a Notice of Contract was filed] and no Notice of Termination is filed, the period for filing statements of claim or privilege will nevertheless expire six months after substantial completion or abandonment of the work, and a statement of claim or privilege filed later than that will be untimely.”

The effective date for these changes? Generally, if the Notice of Contract is recorded on or after 1/1/2020, and all work began on or after 1/1/2020, the new statute will take effect.

Best Practice:  Clarify your deadlines!  As provided by statute, serve notice upon the owner expressly requesting the owner to notify you of the substantial completion or abandonment of the work or the filing of a Notice of Termination of the work.  If in doubt, track your deadlines using the most conservative calculation.

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