Archive for the ‘Mechanics Lien’ Category

Getting Paid – Notice of Contract Filing

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So you’ve completed your work but now you’re running into problems getting paid for the job. As most people in that situation are aware, the Private Works Act (should that be the applicable act) provides very specific instructions for preserving your claims and privileges in this situation. In common terms, the PWA allows you to lien property in order to secure your right to payment. What many people do not know, however, is that there are very specific limitations on this preservation of rights. The subject discussed here is one such limitation: the requirement of filing a notice of contract for certain projects. The notice of contract filing is important because, depending on the amount of the contract, the filing date will determine the time period in which one can file a lien. It is a rather nuanced area of the law, but here we’ll break it down piece by piece.

What is a Notice of Contract?

When the homeowner and the contractor execute a contract, in order for certain parties to later preserve their claims and privileges, a notice of contract must be filed with the mortgage office in the parish where the work is being performed. Louisiana Revised Statute 9:4831. The information required to be contained in the notice is outlined in Louisiana Revised Statute 9:4811, and includes: the signatures of the owner and the contractor; the legal property description of the immovable where work is being performed’ the parties to the contract and their mailing addresses; the price; when payment of that price is to be received; and a general description of the work to be done. When information is omitted, the notice will only be found improper if that incorrect or omitted information is either the parties and their addresses or if the immovable is incorrectly identified. In those two scenarios, the notice of contract will be deemed improperly filed.

An important element in determining just what the notice of contract is is also a discussion of what it is not. The notice of contract is not the contract document! When you look through the PWA, the above is the only required information that must be submitted as a “notice of contract.” Depending on the scope of work, the notice of contract might only be one page long! Why is this important? The short answer: money. Let’s use Orleans Parish as an example. In Orleans Parish, filing a notice of contract will cost you $60 for the first two pages and $13 for each page thereafter. If parties were required to file the contract as opposed to a notice of contract, they would be on the hook for hundreds of dollars just in filing fees. In paring down the information needed for the notice, though, the filing can be extraordinarily cheaper.

Why File a Notice of Contract?

The filing of the notice of contract is important because it will help determine when the tolling period begins for filing liens. This is where matters become complicated. First, we must understand that there are numerous parties involved and affected by the filing of the notice. Most straightforward is the contractor. If a contractor does not file a notice of contract for projects that exceed $25,000.00, then that contractor loses his right to later file a lien. La. R.S. 9:4811. Therefore, if the contractor wants to retain the rights granted to him by the PWA, on projects of a certain sum, the notice of contract must be filed before work begins, which is defined by Louisiana Revised Statute 9:4820. If the contractor is entitled to the rights granted by Louisiana Revised Statute 9:4801, and if they have filed the notice of contract properly, then that contractor will have until sixty (60) days after the filing of the notice of termination or after substantial completion to file their lien.

The trickier calculation deals with subcontractors. The first part of Louisiana Revised Statute 9:4822 states that when a notice of contract is filed properly, then those parties granted a privilege by Louisiana Revised Statute 9:4802 (subcontractors, as well as others) will only have thirty (30) days after the filing of the notice of termination to file their lien. Note the very important difference between those provisions. In the case of a subcontractor and a proper notice of contract, the time period to calculate your lien deadline starts when a notice of termination is filed and not when the project is substantially completed. If the notice of contract is not properly filed, then the subcontractor has sixty (60) days from the filing of the notice of termination or from substantial completion to file the lien.

What Does This Mean?

The notice of contract, therefore, is pivotal in determining when a lien period terminates. For example, if a notice of contract is properly filed, but there is never any termination of work filing, a subcontractors lien period might never end. This, obviously, greatly impacts the rights of the parties to the contract. However, it is not a simple issue.

The language of the Private Works Act is very particular and phrases and terms were chosen for a very specific purpose. There is a reason why some places use “filing of notice of termination of work” versus “substantial completion of work” – it is because they are different concepts. There is a reason why there is specific information that must be included in a notice of contract and why that impacts different parties. These statutes were crafted with care and intent. Considering how important they are in determining your rights, the safest thing you can do to protect your business is to discuss the matter with an attorney. After all, we’re here to help.

 

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Posted in:     About Our Services, Business Matters, Construction Contracts, Construction News, Mechanics Lien  /  Tags: , , , ,   /   Leave a comment

Preliminary Notice and Mechanics Lien Compliance: How?

mechanics-lien-compliance

Getting paid in the construction industry is an art, especially for subcontractors and suppliers who must rely on payment to trickle down from the property owner, through the general contractor, and sometimes through even more parties.

Offsetting these complexities are state laws that provide subcontractors and suppliers with “mechanics lien” rights. These rights have existed in the United States since Thomas Jefferson introduced the first lien legislation more than 220 years ago. Today, the rights are as strong as they ever were.

One huge problem, however, is that companies must comply with the mechanics lien law’s notice and timetable requirements to preserve these mechanics lien rights. This is a minor headache if you do business in a single state, but as soon as you start expanding into other jurisdictions, balancing the paperwork load and differing laws in each jurisdiction becomes absolutely impossible.

What can you do?

1) Dedicate Your Company To Mechanics Lien Compliance

You may be tempted to avoid lien compliance simply because it’s so complicated. It’s easy to pretend that ‘it isn’t worth it’ or that ‘liens don’t work’ to avoid the daunting task of staying compliant with each state’s rules. The rules really do vary from state-to-state and circumstance-to-circumstance, and they are very complicated.

Nevertheless, savvy companies understand that the juice is worth the squeeze with mechanics lien compliance.

Adopting a Lien Policy and sticking to it could realistically drop your non-collectable debt percentage to near 0%; a key performance indicator (KPI) that could literally make your company millions of dollars.

Your company can be dedicated to mechanics lien compliance until their ears bleed, but without a way to actually comply, it won’t matter. For too long, companies have had to compromise their lien rights because compliance was impossible. As the next section explains, however, that’s no longer the case.

2) Use Technology To Manage The Mechanics Lien Laws

If you’re using Microsoft Excel or Outlook to manage your mechanics lien deadlines, you’re making a mistake. If you’re using a service provider and paying them per project to manually (yes, they are doing it manually) track and notify you of your mechanics lien deadlines, than you’re making a mistake.

It is a rare day when a company would rely on a manual process or a spreadsheet to track all of their invoices, expenses, or other accounting items; wouldn’t you agree?  Why in the world then would a company use these same error prone and laborious methods to track something so complicated as lien rights?

Historically, the answer to this was simply that there wasn’t any other choice. The times has changed, however, and there is a great technology available to help companies manage these lien and notice requirements.  Take, for instance, the zlien platform which completely automates the preliminary notice process and manages all mechanics lien and bond claim rights.

It is essential that your company rely on a technology to manage the lien compliance process, enabling the company to dedicate themselves to a lien policy, and resulting in a much better bottom line.

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Posted in:     Filing Requirements, Mechanics Lien  /  Tags: , ,   /   Leave a comment

In The Pipeline – Changes in Louisiana Construction Law

Louisiana State Capitol, Baton Rouge

Louisiana State Capitol, Baton Rouge (Photo credit: Wikipedia)

If there is any one constant in the legal profession, it is that the law is an ever-evolving, dynamic thing. While there are some general principles that tend to not change all that drastically over the years, the devil truly is in the details. Having to keep abreast of these changes is why you’ll hear people refer to the “practice” of law – we attorneys must continue to learn and adapt as we continue through our careers. Here at Wolfe Law Group, we make sure to have our ears to the ground in order to provide the most up-to-date information for our clients and their businesses. This legislative session, there are several proposed changes in Louisiana construction law, all of which may critically impact how contractors do business in this state. This post is the first of two parts discussing those changes.

 Proposed Changes to the Private Works Act

There are currently three bills in various stages of the legislative process that would significantly change how different parties secure their rights to payment. The first, Senate Bill 183, is the furthest along of the three, having successfully passed through the Senate and out of the House Committee on Civil Law and Procedure. It is the only bill this session, and the first bill since 1999, that seeks to amend La. R.S. 9:4802. This statute outlines which parties are entitled to assert claims for payment against an owner and a contractor. Should this bill become law (which is likely given the total lack of opposition in the Senate or in the House Committee), lessors of movables would be required to provide formal notice to contractors and owners within 10 days of their materials being used on a project, as opposed to simple delivery of a lease. This change might sound insignificant, but it is because of that very reason why it is important for us to keep our clients informed. Without paying proper attention to how the law evolves, current or potential clients might lose their ability to secure payment because they were unaware of this formalizing shift in the law.

The other two bills, House Bill 190 and House Bill 362, propose changes to La. R.S. 9:4822. This statute is arguably the most important in the Private Works Act because it outlines and defines the time and notice requirements that must be met in order for parties to secure their right to make a claim to secure payment. House Bill 190 has passed through the House and awaits a vote in the Senate Committee on the Judiciary. This bill proposes the least significant of changes, merely stating clearly that statements of claim and privilege need not have attached copies of unpaid invoices unless the statement specifically states they are attached. House Bill 362, however, would extend the time requirements for parties to file their claims by double. When notices of contract have been properly filed and you are one of the parties entitled to a privilege by La. R.S. 9:4802, you would have sixty (60) days to file your claim after the notice of termination, as opposed to the current thirty (30) day window. If you are a contractor that properly filed your notice of contract (if necessary), you would have one hundred twenty (120) days to file your claim following termination or substantial completion, instead of the current sixty (60) day window. These deadlines are extended throughout the statute: all 30 day limits are changed to 60 days, and all 60 days are changed to 120 days. The success of this bill has yet to be seen: unlike the others, it hasn’t even made it out of committee yet, and the session is fast coming to a close.

An Easing of Home Improvement Contracting Registration

Securing and maintaining the proper licensing and registration is incredibly important in the construction world here in Louisiana. The knowledge and expertise required in performing such work or providing these services is why it is always recommended that people seek out professional assistance, especially for work around the home. Surprisingly, and not necessarily wisely, Senate Bill 81 proposes to modify the status quo in relaxing registration requirement for home improvement contracting. Currently, no person shall undertake or perform or agree to perform home improvement contracting services unless they are registered with the Residential Building Contractors Subcommittee of the State Licensing Board for Contractors as a home improvement contractor. The proposed law (which unanimously passed the Senate and is scheduled for floor debate in the House on May 16th), adds the following exception to La. R.S. 37:2175.2:

No individual shall undertake on his own property self-performed home improvement contracting services having a value in excess of seven thousand five hundred dollars unless registered with and approved by the Residential Building Contractors Subcommittee of the State Licensing Board for Contractors as a home improvement contractor.

Basically, the legislature is trying to make it easier for a homeowner to perform certain work on his or her property without having to go through the necessary registration channels. While this might not be an issue for some, it is worrying that something as particularized as home construction may be continuing down a path of non-regulation. The true extent of this relaxation, of course, will remain to be seen.

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Posted in:     Construction News, Filing Requirements, Law Changes & Updates, Licensing, Louisiana, Mechanics Lien, Payment Requirements, Regulations  /    /   1 Comment

California Civil Procedure Series – How to File Suit

As an attorney in multiple states (California and Louisiana) there are many overlapping rules and theory of law that are transferable from jurisdiction to jurisdiction. However, there are many local and state wide idiosyncrasies that are not necessarily taught in law school or not easily attainable for pro se or pro per litigants. This post has some helpful tips regarding filing a law suit.

California is a jurisdiction of forms. The State Bar has gone to great lengths to make a form for just about any situation. In that same light there are many that overlap and you nearly need a law degree just to navigate through the long list. The California Courts also have very helpful information regarding the legal process and all of the different procedural devices used by lawyers.

A typical checklist for items needed when you file your civil case are 1) Complaint, 2) Civil Cover Sheet, 3) Summons, and 4) Receipt and Acknowledgement. The complaint is your main document to be filed. This is where the Plaintiff lists out all of the facts and causes of action that related to the allegations being asserted in the suit. The complaint is the lawsuit itself and will be a part of the public record. The Civil Cover Sheet is a mandatory form that needs to accompany any new filing. This tells the clerk what type of case is being filed. Next is the Summons. This document tells the court and the opposition who is being sued and what that person/entity’s legal rights are with regard to an answer. Lastly is a handy little form that I like to include called Notice and Acknowledgment of Receipt. This form allows for you to mail serve the Summons and Complaint on your adversary saving time and money. If the defendant does not reply within 20 days, it will be obligated to pay for your service fees. The normal delay to respond to a suit is 30 days.

Once you get your complaint filed you will want to serve your adversary with the documents to complete the process. You can use the Notice form listed above but if that fails then you will have to hire a process server to get the suit to the defendant. Regardless of how you serve them the clerk of court requires proof of service. This too is another form, Proof of Service of Summons. This helpful form has a long check list of methods of possible service. You make sure you followed one of the statutory required methods, file your proof and then your law suit has formally begun. You then must wait for your adversary to answer.

This blog post is a part of the California Civil Procedure Series written by Wolfe Law Group. You should contact an attorney when dealing with procedure issues as there are strict time limitations which need to be followed.

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Zlien Receives First Round of Investment

Congratulations to zlien! The innovative and growing company has just received the first round of a $450,000 investment from the New Orleans Startup Fund. The funding will help the company expand its business nationwide along with add more employees.

Zlien is a great tool for contractors, suppliers, and others in the construction industry because it provides a reasonable and effective way to manage preliminary notices and file mechanics liens.

If you’d like to learn more information about Zlien and this exciting news, click here.

Posted in:     Construction News, Mechanics Lien, Special Features  /    /   Leave a comment