Louisiana Condo Work: Preserving Your Lien
Nowadays, Condominiums are plentiful. It is easy to see in both Seattle and in New Orleans, that developers are taking advantage of smaller sites to provide densely popoulated living options for the public. While condos have hit snags similar to the rest of the housing market, they continue to offer cost efficient living with low maintenance.
For these reasons, condo work continues to grow. In Louisiana, and particularly New Orleans, several major condominium projects have sprung up. Contractors who are not seasoned in the art of working with Condominium boards are unlikely to be aware of the mechanisms used to govern their work with the condo. Lets take a moment to explore how best to preserve your claims.
The Louisiana Condominium Act (LA. R.S. 9:1122, et seq.) provides specific rules and guidelines for how condos are established, governed, and operated. What many do not know is that the Act also has an impact upon the Louisiana Mechanics Lien Statutes, the Private Works Act (La. R.S. 9:4801, et seq.).
Under the LCA, a contractor's lien rights may be impacted based upon the time the work is performed and the party whom contracts with the contractor. Under La. R.S. 9:1124.109, we are cautioned that a contractor may only claim a privilege (lien) against a condo in the event that they are provided with consent by each of the unit owners, upon which they seek a claim for payment.
Luckily, the statute provides an easy manner of obtaining this consent - by contracting with, or gaining approval of the Condominium Association:
if the performance of labor or furnishing of materials is expressly authorized by the association, the labor or materials shall be deemed to be performed or furnished with the express consent of each unit owner and shall be the basis for the filing of a claim of privilege against each condominium parcel in the condominium.
Further simplifying the process is the next provision, which enables a contractor to file a single lien against the Condominium Association in order to perfect its privilege against each of the building's units:
A single claim of privilege filed against the association shall be deemed to be a separate claim of privilege against each individual unit...
Now, the law provides that a condo occupant may extinguish this privilege by paying its pro rata share of the debt, based upon its share of the common expenses of the building. However, that only removes a single claim, and does enable the contractor to have many routes to recovery.
So - what does this mean for our LA contractors:
(1) Determine what stage the condo is in - Have they formed a condo association? or is it still in development? If it is still in development at the time the claim arises - you can file a claim against the entire plat of property. If the condo declaration has been filed - and the property subdivided - then you must have a claim under the LCA.
(2) Preserve a claim under the LCA - If you are hired after the condo association is created - or in anticipation of the condo association - make certain that your contract includes verification or authorization from the condo association. As long as they are a contracting party, or acknowledge the contract, your claim will be preserved.
(3) Recognize normal notice procedures - Though the LCA impacts the Louisiana mechanic's lien laws, it does not disturb the fact that a contractor should continue to comply with notice requirements under the normal mechanic's lien laws.
Hence, you need to ensure that a notice of contract is filed for projects over $25,000.00 and that a Notice of Lien Rights is provided by residential owners under the Residential Truth in Construction Act.
Condo projects can be tricky. Make certain that you are prepared when working on these projects, or you may lose your right to file a lien to preserve your right to payment.
