Thinking about filing a Louisiana mechanics lien? Look no further, here are “5 things to know” that will help you hit the ground running!

Louisiana Mechanics Lien Protection Extends To Many Project Participants

Louisiana mechanics lien law extends protection to many different parties. Not only are general contractors and subcontractors able to file a mechanics lien, but laborers or employees, material suppliers, equipment lessors (if leased to owner, contractor or subcontractor by written lease), architects, engineers, and surveyors also qualify. Even parties that supply fuel for machinery have mechanics lien rights in Louisiana. Out of luck however, are suppliers to suppliers who do not have the right to lien.

The Deadline to File a Louisiana Mechanics Lien Varies

The deadline to file a Statement of Claim and Privilege, (a Louisiana mechanics lien) depends on the party’s role in the project as well as whether or not a Notice of Contract or Notice of Termination has been filed.

General Contractor:

• If a Notice of Termination has been filed, the general contractor has 60 days from the date the notice was filed
• If a Notice of Termination had not been filed, the general contractor has 60 days from the date the project was considered completed

All Other Parties:

• If a Notice of Contract was filed, project participants not in contact with the property owner are required to file the lien 30 days from the date that the Notice of Termination was filed
• If a Notice of Contract was not filed, project participants not in contact with the property owner have 60 days from the date the Notice of Termination was filed, or 60 days from the date of substantial completion of the work, if no notice of termination is filed.
• For material suppliers specifically, if a Notice of Contract was not filed on a residential project, the project participant has 70 days to file a mechanics lien. The 70 days will either begin on the date notice of termination was filed, or, if no notice of termination was filed, from abandonment or substantial completion of the work.

Preliminary Notice is Only Required for Some Project Participants

Preliminary notice in Louisiana is very specific to the project participant and their role. Specifically, general contractors must file a Notice of Contract in the office of the recorder of mortgages in the property’s parish before beginning to work on a project valued at over $25,000. In the event that a general contractor is working on an owner occupied existing residence, a Notice of Lien Rights is required to be given to the property owner prior to beginning any work on the property. Failure to provide the appropriate preliminary notice could prevent the project participant from lien rights.

Material suppliers have a different set of requirements. If working on a residential project, material suppliers are required to provide a Notice of Non-Payment via certified mail with return receipt requested to the property owner and general contractor 10 days prior to filing a mechanics lien.

Even further, equipment lessors must also provide preliminary notice if not directly in contact with the property owner. A copy of the lease must be sent to the property owner via certified mail with return receipt requested to the property owner and general contractor at least 10 days prior to the first date of providing materials for a project.

Though preliminary notice is not required of any other project participants, it is always a good idea to provide notification. Additionally, project participants are allowed to request notification of the filing of a Notice of Termination, or of abandonment/substantial completion of the project. If this preliminary notice is given and the owner fails to notify the claimant of the filing of a Notice of Termination/abandonment/substantial completion, the owner will be liable for the claimant’s attorney’s fees.

Working Unlicensed Could Effect How Much A Project Participant Gets Paid

Licensing laws in Louisiana are unique. While it is not required that project participants are licensed, it is recommended. If project participants are unlicensed, the licensing board may only recover the “minimum value” of work completed on the project.

Notary is No Longer Required in Louisiana

Unlike many states, Louisiana mechanics lien law has been amended and no longer requires the a mechanics lien be notarized. It does require however, that after being filed, a copy of the lien statement is sent to both the property owner and general contractor (if applicable)

Written by Scott Wolfe Jr See original article at Louisiana Mechanics Lien Law: 5 Things to Know Originally posted on the LIEN

The Lien Blog and zlien’s Mechanics Lien resources are stuffed with information about the mechanics lien laws as they vary from state-to-state. This post will provide some filing and procedure best practices for recording a mechanics lien specifically in Orleans Parish, New Orleans.

What You Need To Know About Filing An Orleans Parish Mechanics Lien

Typically, recording procedures will be standard throughout an entire state.  Some states use the same filing fees no matter the county, town or parish.

One practice that Orleans Parish follows that is constant throughout the state is legal-size paper.  All mechanics liens recorded with the Clerks of Court throughout Louisiana must be filed on legal sized paper, 81/2 x 14 inches.  The clerk may still accept documents on the letter-sized paper, but anticipate an additional $15 surcharge for the error.  Additional fees will also accrue if incorrect margins are used.

You can find all of the Orleans Parish Clerk of Court filing requirements and fees on their site.

Now, it wouldn’t be New Orleans without doing things a bit differently.  Orleans Parish mechanics liens are required to be stamped in Notarial Archives before filed in the Recorder of Mortgages Office.  And you know what that means- additional fees!  This is the rare occasion where 2 checks are required for filing.  Both can be made out to the “Clerk of Court.”  One check will take care of your filing fees, and the other will cover Notarial Archives (NA).  Any documents ranging from 1-10 pages are $20 to be stamped in NA, and any exhibits are an additional $10.

If you are filing your mechanics lien in person, be ready to take a trip up to the 5^th floor for Notarial Archives then back down to the 4^th floor for the Recorder of Mortgages.  If you are mailing in your documents, they will make sure everything is sent to the proper offices as long as you include a cover letter advising them to record in the Mortgage Office after stamped in Notarial Archives (nothing fancy).

Should you wish to have a copy returned to you, be sure to include a self-addressed stamp envelope and include fees for your copy- they vary by color or black and white.

While the filing procedures can be tricky – following the above guide will ensure your Orleans Parish mechanics lien gets filed correctly.

Written by Gretchen Lynn See original article at Orleans Parish Mechanics Lien: Information on Filing in Orleans Parish, Louisiana Originally posted on the LIEN

Last Year, Scott Wolfe Jr. wrote post criticizing a case decided wrongly by the Louisiana Second Circuit Court of Appeals: Louisiana 2nd Circuit Demotes Importance of Lessor’s Notice of Lease – But It’s Wrong!

In that case, Hawk Field Services v. Mid America Underground, the court held that lessors who failed to send a Notice of Lease within 10 days of first furnishing rental equipment to a construction project were not entitled to “privilege” under the law but still were eligible for a “claim.”

Previously, lessors who overlooked sending the Notice were prevented from any recovery under both the Louisiana Private and Public Works Acts.  Although, as Scott noted, this interpretation of the law is only binding on one of five Louisiana appeals districts (the Second Circuit includes parishes around Shreveport, but not, for example, New Orleans, Baton Rouge, or Lafayette), the decision is still troubling for property owners who are now at risk of a “claim” at any point.

Unfortunately, in late October of 2012, the Louisiana Supreme Court denied a writ of certiorari filed by one of the parties.  In layman’s terms, this means the court refused to hear the appeal.

It is a grim but realistic truth that even when lower courts wrongly decide cases, limitations of time and resources prevent a higher court from correcting those mistakes.  State supreme courts such as Louisiana’s only want to take the most urgent cases and, as evidenced by the writ denial, Hawk Field Services simply did not surpass that threshold.

There is good news, however, that the Louisiana Supreme Court may soon be reviewing the issue.

In a case before the Fourth Circuit Court of Appeals, Miccol Enterprises v. City of New Orleans, the court refused to extend the holding set forth in Hawk Field Services.

As Scott noted, one of the primary reasons the Louisiana Supreme Court probably denied the appeal was because there was no “circuit split” — in other words, there was no disagreement between the circuits yet.  Of course, Miccol Enterprises changes these circumstances substantially.

Perhaps the losing party will file another writ to the Supreme Court and we will finally have a clear ruling on this issue that applies to the entire state. Until then, for property owners in the Second Circuit’s area, equipment lessors do not have to file Notices of Lease in order to preserve their right to a claim later.  As Scott notes, it may still be a good idea to do so since although it hasn’t happened yet, Hawk Field Services is likely to be overturned.

Written by Elliot Singer See original article at Louisiana Notice of Lease: Supreme Court Refuses To Hear Wrongly Decided Case Originally posted on the LIEN

It dawned on me this morning that it’s been too long since I’ve written about home sweet home – Louisiana.  While Zlien is happy to serve clients around the country, our hearts get warm when someone uses our system from Louisiana, and especially the New Orleans area.  Although Louisiana’s law is a bit different from every other state, and its lien remedy has a quirky name (“Statement of Claim and Privilege”), it has a mechanics lien remedy just like its fellow states.

This post will provide you with a step-by-step guide to preparing and filing a Louisiana mechanics lien.  There’s even a free mechanics lien form at the end of the post available for download.

Step 1: Are You Qualified To File A Louisiana Mechanics Lien?

We’ve lately been writing a number of “How To” articles about filing mechanics lien claims, and one thing we mention in each of the articles is that mechanics lien protections are only available to some parties. Every state is different as to who is and who is not protected by these lien laws.

I once argued a case (in my lawyer days) that collecting soil to test in a off-site lab was lienable work.  That never made it to a final decision, but I honestly think the argument had merit and should have won.  Plus, I’ve written about some interesting results to reviewing Louisiana’s mechanics lien law on this question before, such as the articles:  Can You File A Mechanics Lien For Boarding Property In Preparation For A Hurricane and  Can Mardi Gras Stand Constructors File A Mechanics Lien?

Step 2:  Did You Send Your Required Notice?

The states are usually separated into two categories:  Notice states and Non-Notice States.  Some states, in other words, require notices sent to preserve lien rights, and other states don’t.  Louisiana is one of the hybrid states with a very untraditional notice requirement.  As a result, a lot of companies get this wrong.  Beware.

A notice is usually required under three scenarios.  If you don’t fall within one of these four scenarios, move on:

1. You Contracted With The Owner – Any Project Type:  If you contracted with the owner, and your contract is over $25,000 in value, you need to file a “Notice of Contract” before work begins to preserve your right to later file a lien.
2. You Contracted With An Owner-Occupant:  If you contracted with the owner and the owner occupies the residential property where the work is being performed, you must deliver a “Notice of Lien Rights” to the owner prior to commencing work.
3. Material Supplier to Residential Project:  If you are a material supplier (i.e. furnished materials only, and not labor), you must deliver a “Notice of Non-Payment” at least 10 days before filing a mechanics lien.  If the contractor recorded a “Notice of Contract” as per the above, the notice must be sent both 10 days before the lien filing and within 75 days of the last day of the month in which the unpaid material was delivered.  This is complicated, so see a post about this:  The Material Suppliers Guide to Louisiana Mechanics Lien Laws and Notice Requirements.
4. Equipment Rental Companies:  If you are renting equipment, you’ll need to deliver a copy of the lease and a Notice of Lease to the property owner within 10 days from the date of first delivering the equipment to the project.  Louisiana’s Notice of Lease Tips, Tricks and Forms.

If you needed to send this notice and didn’t, make sure you do.  If you don’t have time, you’re probably out of luck and will want to reference our article about filing an invalid lien:  What is the Risk of Filing An Invalid Mechanics Lien?

Step 3: Draft Your Mechanics Lien Form

The mechanics lien form is the one thing everyone thinks about.  As you can see from this post, however, the process of filing a Louisiana mechanics lien involves much more.  Unfortunately, while everyone appreciates the need for preparing the mechanics lien form, it is still very common to overlook the small nuances and technicalities that can be the difference between your lien claim being valid or invalid.

The contents of a Louisiana mechanics lien is dictated by La R.S. 9:4822(G), which provides that your claim:

(1) Shall be in writing

(2) Shall be signed by the person assering the same or his representative;

(3) Shall reasonably identify the immovable with respect to which the work was performed or movables or services were supplied or rendered and the owner thereof; [and]

(4) Shall set forth the amount and nature of the obligation giving rise to the claim or privilege and reasonably itemize the elements comprising it including the person for whom or to whom the contract was performed, material supplied, or services rendered.

Seems simple enough, but there are a lot of details left unanswered by this statute.  For example, attorneys and claimants frequently confuse the requirement for a mechanics lien claim to be notarized (it does not need to be in Louisiana). What does the statute mean by a “reasonable” identity of the property?  Is a legal property description required?  And how much of an itemization is required exactly to file your lien claim (see: What’s Inside A Lien?)?

Step 4: File Your Louisiana Mechanics Lien

Your lien form is ready to go and you’re ready to file your document. You’ll need to pay attention to two things: (1) Getting the document printed on the correct paper with the correct margins; and (2) Getting your document filed in the correct office.

The first part doesn’t have an easy answer. Each Louisiana parish has its own bizzarre requirements, and you’ll have to just call the recorder and figure out what the rules are there.  Then, make your document conform.

The second part has an easier answer – but still is different each project.  Your mechanics lien must be filed in the recorders office for the parish where the project job site is located.  Don’t get that wrong – it is fatal to your lien claim!

Step 5: Get Paid Before Your Mechanics Lien Expires Or File Suit

Mechanic lien claims do not last forever. In Louisiana, they last one year from the date you filed your mechanics lien.  While your mechanics lien claim is likely to get paid before that one year period, in the event it does not, make sure you take the next step to foreclose on the mechanics lien with a lawsuit.

Failing to do this will result in the expiration of your claim, and that means you’ll lose your security.  You don’t want to lose your security.

Free Louisiana Mechanics Lien Form

Here is the grand finalé:  a free Louisiana Mechanics Lien Form.  Zlien is the leader in providing free online resources about the mechanics lien laws nationwide, curated and created by attorneys with construction law experience.  Though we think you would be better off using our system to prepare and file your mechanics lien, we’re happy to share this form with you free of charge.

Written by Scott Wolfe Jr See original article at Louisiana Mechanics Lien: How To File Your Claim And Get Paid Originally posted on the LIEN

Photo Credit: Brett Duke, Nola.com | The Times-Picayune

Did you hear about the #Blackout?  Yes, our dear city subjected themselves to a national embarrassment when the lights shut off in the Superdome. One of the biggest stories that came out of the spectacle was the increased activity on Twitter.

We couldn’t help ourselves:

If you fix the lights at the #superbowl and don’t get paid, file a lien with @zlienit

— Scott Wolfe Jr (@scottwolfejr) February 4, 2013

While mostly a joke, it does lead me to one of my favorite conversations on this blog, all filed under the Scenarios tag. When a company is called in to fix the Superdome’s electrical problems, could they file a mechanics lien if unpaid?  If so, what type of lien would be it be – public or private?

Since the Superdome is in Louisiana, we’ll discuss Louisiana law. Nevertheless, the same outcome would result just about anywhere.

Who Owns and Operates The Mercedes-Benz Superdome?

The Mercedes-Benz Superdome has a lot of characteristics to make one think that it is a state venue, and then, a lot of characteristics to make one think it’s a private venue.  It’s very large (the largest dome structure in the world) and it is owned by the state of Louisiana. In fact, the Louisiana Stadium & Exposition District – a public board – lists its purpose to “plan, finance, construct, develop, maintain and operate” the Superdome.

Nevertheless, there are private characteristics as well.

The state leases the building to different tenants, including the New Orleans Saints. These tenants have certain rights (such as New Orleans’ rights to name the building), and they have different responsibilities (such as to make certain types of improvements).

English: Side of the Superdome; New Orleans, Louisiana (Photo credit: Wikipedia)

The question about whether there are any lien rights here boils down to who is responsible for the electrical functions of the Superdome.

If this is something left to the tenants, then any construction work to fix the dome’s electrical problems would fall on those tenants, and the laws applicable to “Private Lease on Public Land” situations will apply. In the case of Louisiana, the lien claimant would likely have a right to file a claim against the tenant’s interest in the property.  Otherwise, the state’s public works laws would apply.

While I don’t know the exact details of the owner and tenant responsibilities  my best guess is that this egg falls on the state’s face, and that the LSED is responsible for fixing the electrical work.

To strengthen my thoughts that this would be a public project is a Nola.com article investigating recent electrical work at the Superdome, whereby the LSED made arrangements for “emergency” electrical work immediately before the Superbowl.

Electrical Repair Is Qualified For Mechanics Lien Protection

Okay, now we know which body of law applies since we’ve determined that any electrical fixes would be a Public Works Project. The next question is whether the work itself (electrical repairs) qualifies for lien protection.

The answer is clearly yes. Electrical work (whether it be for new construction or repair / restoration construction) is clearly a construction furnishing that qualifies for lien or bond claim protection. Just to completely exhaust the argument we can look to Louisiana’s Public Works Act’s definition of “Public Work:”

“Public work” means the erection, construction, alteration, improvement, or repair of any public facility or immovable property owned, used, or leased by a public entity.

It is worth noting that immediately before the Superbowl, the LSED “authorized and approved” a project related to the electrical services at the Superdome and classified the project as an “emergency” work. According to one Nola.com article, this emergency classification would have excluded the project from some public bid laws.

But…would it exclude the project from the ability to make a public claim?

The answer is likely no.  While the state may be excused from working within the public bid laws, there are no emergency exceptions for the Public Works Act.  Any project over a certain dollar threshold (for which the Superdome repairs would certainly qualify) would require a bond, and if a party was not paid, that party could file a lien claim against that bond.

Related articles

• Scenario: Mechanics Lien for Constructing TV Broadcast Sets (Super Bowl)
• Who turned in Super Bowl’s lights-out performance?
• Entergy, SMG Issue Statement Regarding Power Issues at Mercedes-Benz Superdome
• Watch: Super Bowl 2013: Lights Go Out in the Superdome
• Lights fail in Superdome embarrassment

Written by Scott Wolfe Jr See original article at Fix The Lights To The Superdome And File A Mechanics Lien – Here Is How Originally posted on the LIEN

As always a general rule of thumb for all lien law nation wide is that the requirements to file are technical.

This post deals with Louisiana, and shows how timing can be used for (by the legally savvy) or against a party.

Most all contractors either know that they should or that they are required to file a notice/certificate of “substantial completion” at the end of a project. This document is typically signed by owner and general contractor and filed in the local mortgage office of the parish where the work was performed. This substantial completion notifies third parties that the work on the project is now complete with the exception of some punch-list items and that the owner has accepted the work. It signifies that the project is now capable to be put to its intended use.

The significance regarding filing liens is very important. This substantial completion document is the most concrete way to determine when a statutory lien period has commenced and when it terminates. A contractor, equipment lessor, owner and/or supplier would reasonably and logically think that both the Private Works Act and Public Works statutes in Louisiana would treat the filing of this document similarly. To some extent this is true but there are some very important differences as explained below.

Louisiana Lien Deadline on Public Works Projects

Deep in Chapter 10 of the Louisiana Revised Statutes lies the Public Contracts section. La. R.S. 38:2242, spells out the timing mechanism for substantial competition of a project. It is described in subsection (B) as follows:

B. Any claimant may after the maturity of his claim and within forty-five days after the recordation of acceptance of the work by the governing authority…”

This provision basically says that the claimant (entity filing the lien) has forty-five (45) days from when the acceptance of work (notice of substantial completion) is recorded to file a public lien. So in theory here, the job can reach substantial completion and/or the owner accept the work on a particular date, but that actual date is useless. The only date that is worthwhile is the date of recording, not the substantial completion date. There could be a few to many days difference in these.

This timing mechanism is very exact and lets contractors, laborers, suppliers and equipment lessors know exactly when they need to file a lien to preserve rights. There is not much gray area here. Owners and General Contractors need to be aware of this so that they get the acceptance of the work filed quickly.

Louisiana Lien Deadline on Private Works Projects

To the contrary, the Louisiana Private Works Act as codified in La. R.S. 9:4822, does not start the lien period based off a recording date of the substantial completion. Subsection (B), (C) and (D) only mention the “substantial completion” of the work. This revised statute is very technical but from a plain reading it does not require the notice of substantial completion to be filed at all. If nothing is filed then the parties have to go and look at other circumstances such as putting the project to its ordinary use and/or public documents such as a certificate of occupancy to determine a substantial completion date, then the lien deadline is calculated retroactively.

A smart and savvy owner or general contractor can have a date of substantial completion which is agreed upon, and then either not file it in the public record or wait to file it later on so as to almost trip up any possible lien claimants. The date of substantial completion on the notice is the date that will be used to calculate the lien deadline, not the date of recording.

Let it be noted that the Private Works Act does require a “Notice of Termination” to be filed and the recording date on this document will start the lien period. A notice of termination is complicated in itself and the subject of a future blog post.

Conclusion

Lien laws are complex and complicated. Its important to know all relevant dates for construction projects, such as when work was performed, when it was completed, when materials were first delivered, last delivered and so on. These dates are important so that liens can be filed and enforced. Zlien has mechanisms and software to help guide you when you have the right dates.

Written by Seth Smiley See original article at Louisiana Liens: Filing Date Differences For Public And Private Projects Originally posted on the LIEN

Super Bowl Brings Construction to New Orleans

The Super Bowl is only a little over a week away, and this year, it’s being hosted in the Superdome – just a couple of miles from Zlien’s home in Uptown New Orleans.  A big event like the Super Bowl always brings an influx of people and business to the area, and some of that business is construction.  One fairly unique aspect to the construction that attends an event like the Super Bowl is the fabrication of television broadcast sets.  However, just like previous posts regarding Mardi Gras viewing stands and “construction” for hurricane preparation, the question is whether or not mechanic’s lien protection extends to parties doing that work.

Can You Lien for Work Constructing Broadcast Sets?

This question can be viewed through basically the same the lens as the other scenarios mentioned above (Mardi Gras stands and hurricane preparation).  In most states, it is probably fairly cut and dry that the answer is No, you are not afforded mechanic’s lien protection for that type of construction work.  Remember, incorporation of the work into the piece of property is a key to mechanic’s lien rights.  Clearly, just like Mardi Gras stands, building a television broadcast set is a construction project, and just as clearly, there is some benefit to the property owner.  Unfortunately, however, since the broadcast set is a temporary structure there are very likely no lien rights in most states.  An easy rule of thumb that is generally (though not always) appropriate, is “no permanent attachment – no lien rights”.

In Louisiana, however, the answer is not so clear.  First, the parties allowed mechanic’s lien protection in Louisiana are:

(1) Contractors, for the price of their work.

(2) Laborers or employees of the owner, for the price of work performed at the site of the immovable.

(3) Sellers, for the price of movables sold to the owner that become component parts of the immovable, or are consumed at the site of the immovable, or are consumed in machinery or equipment used at the site of the immovable.

Note that the requirement that movables become component parts, or consumed into, the property only applies to material suppliers – contractors and subcontractors are entitled to lien for the value of their work, as long as the obligation arises out of a lienable “work”.  A work is defined by Louisiana statute as:

a single continuous project for the improvement, construction, erection, reconstruction, modification, repair, demolition, or other physical change of an immovable or its component parts.

This is where the protection may come for the local contractors building the tv stages, “other physical change” is a pretty broad category, and it is clear that the erecting of a large television broadcast set would result in a physical change to a piece of property.  However, the statute is silent on whether the physical change must be permanent.  While it is generally the practice of courts to not read words into statutes that are not present in the clear text, the fact that all of the other actions listed result in a permanent change to the property may cause a judge to lean in that direction.

So, the answer to the question of whether a mechanics lien may be brought for the construction of a television broadcast set is: “Generally no.  Maybe in Louisiana, but probably not there, either.”

Written by Nate Budde See original article at Scenario: Mechanics Lien for Constructing TV Broadcast Sets (Super Bowl) Originally posted on the LIEN

A complex feature of Louisiana’s mechanics lien law has been changed in the state’s most recent legislative session, setting forth a mechanics lien foreclosure deadline that is easier to calculate. The law takes effect on August 1, 2013, and can be read in its full text here:  Louisiana 2012 Act 394.

Under existing law, mechanics lien claims filed in Louisiana (called “Statements of Claim and Privilege”) expired if they were not foreclosed upon within 1 year from the date the lien claim was originally due.  To figure out the expiration period litigants are required to calculate when the lien was due (which is tricky) and then count one year from that date.

The law that takes effect on August 1, 2013 will make things simpler by requiring lien foreclosure actions within 1 year from the date the mechanics lien is filed – a very concrete date.

Overall, this change in the law is good.

The mechanics lien deadline in Louisiana is surrounded by gray matter in most instances because it may require a determination of when substantial completion occurred on the project. By extension, the existing law meant that foreclosure deadlines were just as confusing. This law change leaves the mechanics lien deadline in a haze but makes the foreclosure deadline concrete.

Property owners, developers and some prime contractors are also likely pleased with the change because it reduces the life of most Louisiana mechanics lien claims.

Since Louisiana is one of those states whose mechanics lien deadline calculates from the completion of a project (versus the claimant’s work), many mechanics lien claims are filed weeks, months or even a year or so before the project is completed. Existing law allows these lien claims to remain valid undisturbed until 1 year after the project’s full completion.

The new law will reduce the effectiveness to just one year from the lien’s filing, with obvious implications for the life expectancy of a Louisiana mechanics lien.

Opposite of property owners, developers and prime contractors, suppliers and subcontractors may be weary of the change. While it makes the deadline calculation easier, it also means that they may be facing a decision on whether to foreclose the lien before the end of construction project. If things like retainage are still owed, but not yet due, this could make for a difficult decision.

Written by Scott Wolfe Jr See original article at Louisiana Lien Foreclosure Deadline Law Change Effective August 2013 Originally posted on the LIEN

Thanks to a reader who requested a blog article about the assignability of mechanics lien rights in Louisiana, as it inspired this post.  You can post a question to us by clicking the “Ask Us” banner floating on the left-hand side of the blog.

Assignment: A term used in the law of contracts and the law of real estate. In both instances, it encompasses the transfer of rights held by one party – the assignor – to another party – the assignee. (Definition via Wikipedia).

Assignment is a simple concept that we’ve discussed on two previous occasions here on the Lien Blog (tag Assignment); once related to New York law and once related to Utah law.  In both cases, the right to assign a mechanics lien claim was allowed by statute.  The same is true in Louisiana, and most of the country.

In Louisiana And Most Everywhere Else Lien Rights Are Generally Assignable

Mechanics lien statutes may or may not specifically mention the assignment of a lien claim. In Washington, for example, assignment rights to mechanics lien claims are specifically mentioned in the statutes, and it’s actually required to indicate on the lien claim itself whether the rights were or were not assigned to the claimant.

Nevertheless, whether assignment is specifically mentioned within a state’s lien statute isn’t too important unless it is mentioned to specifically prohibit the practice.  That’s because each state has general statutes or case law (or civil codes, in the case of Louisiana) that governs assignment rights in general.  They are a lot like the rule in Louisiana, which states the following in Civil Code Article 2642:

All rights may be assigned, with the exception of those pertaining to obligations that are strictly personal. The assignee is subrogated to the rights of the assignor against the debtor.

The general rule, therefore, is that all rights are assignable. This would include a party’s lien rights.

Warning 1: Be Careful Buying Lien Rights If Litigation Already Commenced

Louisiana Civil Code Article 2652 contains a special rule that could impact the assignment of a mechanics lien claim.  The article concerns the “sale of litigious rights:”

When a litigous right is assigned, the debtor may extinguish his obligation by paying to the assignee the price the assignee paid for the assignment, with interest from the time of the assignment.

A right is litigious, for that purpose, when it is contested in a suit already filed.

Nevertheless, the debtor may not thus extinguish his obligation when the assignment has been made to a co-owner of the assigned right, or to a possessor of the thing subject to the litigious right.

A mechanics lien claim prior to the initiation of a foreclosure suit would not likely be covered by this article. However, if a lawsuit on the lien has been initiated, beware of buying the lien rights.  That’s because you may be limited to recover only the amount you paid for the claim, and not the underlying value of the claim.  Obviously, this could make the point of buying the claim pointless.

Interestingly, however, this article probably doesn’t apply if the lien right is sold before the filing of the foreclosure suit.

Warning 2: Be Careful Buying Lien Rights Because Of Practical Challenges

Selling the “right” to proceed against a party to recover something is always more challenging then selling a iron-clad debt.

A promissory note, for example, is very easily assignable.  It’s very clear that there is a debtor for a specific amount of money, and the assignee (the party who buys the note) can recover against the debtor without needing any additional proof of the debt.  All the assignee needs is the note.  This is why mortgages are so frequently bought and sold in the mortgage marketplace.

Such is not the case with mechanics lien claims.

Lien claims have an effect against the property that is attached, but it is a temporary right held by the claimant until the claimant proves that the debt is owed in court, after a full-fledged trial of fact.  Things are frequently in dispute on construction projects, and so the lien claimant usually has to prove that the work was performed, there are no workmanship disputes, all delay issues are resolved, etc. etc.

There are practical challenges for the buyer of a mechanics lien claim, as they need the original claimant’s records and testimony to stick around so that the claim can be proven.  This is not to mention the risk that the lien claim isn’t well supported or documented, or simply isn’t viable.

Written by Scott Wolfe Jr See original article at Can You Assign A Louisiana Mechanics Lien? Originally posted on the LIEN

Say it isn’t so- the Zlien home office alas has power!  After five days without electricity due to Hurricane Isaac, our New Orleans office is finally back in business.

Thank you to everyone for their support last week while we shifted all our operations to the west coast offices.

Happy Labor Day, and from everyone stationed in our New Orleans office, we look forward to getting back to work and helping you Lien Smart and Get Paid!

Written by Gretchen Lynn See original article at So, Two Zlien-ers walk into the office… Originally posted on the LIEN