Construction equipment leasing companies have a tough time in the mechanics lien world, regardless of where they are. In some states, they don’t have any lien rights at all. In other states, to qualify for lien rights, they must jump through hoops and distribute specialty notices.
Louisiana has perhaps the most aggravating notice requirement for equipment rental companies. Previously, we wrote about the requirement generally on this blog here and here. This post is going to provide you with more detailed information, some tricks to make your notice more effective, and free forms.
Louisiana’s “Notice of Lease” Requirement
[pullquote style="right" quote="dark"]Those leasing equipment to a construction improvement in Louisiana do have the right to file a mechanics lien or bond claim, but only if they protect that right.[/pullquote] First things first, let’s give you the basics about this requirement. Those leasing equipment to a construction improvement in Louisiana do have the right to file a mechanics lien or bond claim, but only if they protect that right by delivering a preliminary “Notice of Lease” document to the required parties within 10 days of first furnishing the equipment. Yes, just 10 days!
This notice is called a “Notice of Lease,” and it is required on both state and private projects.
On private projects, the requirement comes from La R.S. 9:4802(G)(1):
[L]essor of the movables shall deliver a copy of the lease to the owner and to the contractor not more than ten days after the movables are first placed at the site of the immovable for use in a work.
On state projects, it comes from La. R.S. 38:2442(C)(1):
[L]essor of the movables shall deliver a copy of the lease to the owner not more than ten days after the movables are first placed at the site of the immovable for use in the work.
The Notice of Lease requirement for state and private projects have a lot of similarities, in that they both require the equipment leasing company to deliver a “copy of the lease” within 10 days of first furnishing. The requirements are slightly different in that on state projects, the notice need only go to the “owner” – the public entity commissioning work – while on private projects the notice must go to both the owner and the contractor.
These notices should be sent certified mail, with return receipt requested (La RS 9:4842).
Tricks To Sending A Better Notice of Lease
[pullquote style="left" quote="dark"]If you’re sending out the Notice of Lease, you should use the opportunity to take advantage of some other notice provisions within Louisiana’s statutes.[/pullquote] If you’re sending out the Notice of Lease (with a copy of the lease document itself, don’t forget!), you’re already reaching out to the project contacts and spending the money to deliver a document to them. You should use this opportunity to take advantage of some other notice provisions within Louisiana’s statutes to better position yourself in the event of a non-paying customer.
On private projects, you will want to consider sending a “Notice to Owner of Obligations.” This notice is authorized by La RS 9:4822(K), and it obligates the property owner to notify you when the project is terminated or completed. This is a big deal in Louisiana, because this starts the time period for you to file your mechanics lien.
If the owner fails to fulfill its obligation, the law holds the owner “liable for all costs and attorney’s fees for the establishment and enforcement of the claim or privilege.”
On state projects, there isn’t a “Notice to Owner of Obligations” type of document available, however, it is worthwhile to send a formal request for a copy of the applicable bond and prime contractor. The public entity commissioning the work should, upon receipt of your request, furnish to you a copy of the bond and the prime contract. This will give you information on when the project should be completed, and will identify the bonding company for you, which is a serious benefit when time comes to make a claim.
Free Louisiana Notice Forms
We love giving away free forms . You can check out Zlien’s database of free mechanics lien forms for the entire United States on our resources page, and you can also view free lien forms for Louisiana at the Louisiana Lien Law Resources page. Of course, you should beware of sending off notices and liens yourself, as there are many traps and possibilities to make common mistakes that could undermine your claim. As we’ve preached in the past, in other words, it’s smart to outsource your preliminary notice work.
Here are some free forms applicable to this post:
Notice of Lease – Private Projects
The Notice of Lease in Louisiana must be sent by any party leasing equipment of any kind to a construction improvement in the state. The notice must be delivered within 10 days of first furnishing. This form is for equipment furnished to private projects, like commercial and residential projects. It must be sent to the prime contractor and the property owner, and must be sent by certified mail, return receipt requested. You must include a copy of the lease itself with the notice.
Notice of Lease – Public / State Projects
This Louisiana Notice to Lease form is for use on state, county or other public projects (not federal). The form must be filled in and sent to the public entity commissioning the work within 10 days of first furnishing the equipment, and should be sent by certified mail with return receipt requested. You must include a copy of the lease document itself with the notice.
Notice to Owner of Obligations (Private Projects)
This is an under-utilized document in Louisiana, authorized pursuant to La RS 9:4822(K)-(L). The document obligates the owner to notify you when the project has been completed or terminated, so that you’ll know when your mechanics lien period starts and ends. If you send this notice, and the owner does not provide this notification, you’ll be able to recover damages and attorney fees from the owner.
Request for Bond and Prime Contract (State / Public Projects)
If you’re on a state, county or other public construction project in Louisiana, it’s a good idea to get a copy of the surety bond in place and the prime contract. You’ll need both items to make a speedy claim for payment in the event of non-payment, and in Louisiana, you’re entitled to receive this information – you just have to ask. This form is a formal request.