Archive for the ‘Filing Requirements’ Category

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.

Enhanced by Zemanta
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.

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

California Lien Law In For A Change…

Over the past few years the California Legislature has been tinkering with its construction lien laws, both public an private. There have been numerous write-ups with commentators chiming in on whether the changes are a good thing or a bad thing. Nevertheless, many have happened and more changes are set to come shortly.

As of July 1, 2012 the governing statutes will be assigned to new numbers and a new section of the California Civil Code. Jones Day did a very comprehensive article back in January of this year outlining the changes. Here is an excerpt from the article of how the code articles are going to be changed in numbering:

“Effective July 1, 2012, the existing Mechanics Lien Law (commencing with Section 3082 of the Civil Code) will be repealed and replaced with new provisions in three titles relating to: (i) works of improvement generally (commencing with Civil Code Section 8000); (ii) private works of improvement (commencing with Civil Code Section 8170); and (iii) public works of improvement (commencing with Civil Code Section 9100).” See the full article here.

This is a big deal for contractors, lawyers and document preparation companies because the entire landscape is changing. Even if the substance of the law is the same, lawyers will tell you that words and punctuation can be very costly when left up to new interpretation.

More recently another construction law blog gave a more brief version of the new changes that have gone into and will be going into effect. Mark Budwig of Government Contracts Advisor posted these in his March 2, 2012 post.

The key here is not to panic but to embrace the changes and be the savvy contractor who knows about the changes and does not get rattled. Another important factor is to outsource trivial knowledge like this to trusted sources like an attorney or a more efficient service such as Zlien.com.

Posted in:     California, Construction News, Filing Requirements, Law Changes & Updates, Mechanics Lien  /  Tags: , , , , , ,   /   2 Comments

Sworn Statement of Amount Due – Louisiana’s Public Lien

Here at Wolfe Law Group, I have been blogging a lot lately on liens for both public and private projects (See other posts here). Anytime a property is owned by and arm of the state then you are dealing with a public project. Although, this seems simple, many contractors do not always see the connection. The reason why so many disputes are happening now is because public projects have dominated in the years of the poor economy. Contractors on these projects need to know the rules so that they can get paid. (see La. R.S. §38:2241 et seq.)

Since the state owns the land, there are no security devices, such as a lien that can attach to the land and call for its foreclosure in the event of default or non-payment. Therefore the state has come up with its own security device to give contractors and laborers a way to collect when not receiving payment.  Here we have the Louisiana coined term: Sworn Statement of Amount Due. La. R.S. §38:2242, which is Louisiana’s version of a public lien. This document needs to be filed by the subcontractor or laborer within 45 days of when the work was accepted by the government body overseeing the project. Id.

One way for a contractor who has a sub on any tier below it to cancel the Sworn Statement of Amount Due filed, is to “bond off” the lien. La R.S. §38:2242.2. This mechanism allows for the higher tier contractor to provide security or cash at an amount 125% of the total lien. Id. At this juncture the property will be clear but there will be evidence of the bonded off lien still held with the parish mortgage office. This is pretty common practice so that higher tier companies keep the bond free while settling disputes with subs.

If at the end of the 45 day window from the state agency signing off on full completion of the project there are still any claims remaining as unpaid, then the state, claimants, or contractors may file a concursus proceeding to have the funds distributed into the registry of the court so that the parties can fight about who deserves the funds. La R.S. §38:2243. Any party may file this action, and its a very powerful tool. This is why many of the contractors will use the mechanism to “bond off” the claims, so as to prevent this process.

Finally, every parties favorite section is where attorney fees are awarded. In the Public Works Act, by statute attorney fees are permissible. This gives all parties the confidence to fight thinking that they will recover the fees. Unfortunately, recovery of attorney fees is still a difficult chore even when there is a statute. Here, La R.S. §38:2246 allows for attorney fees to any claimant who timely and properly filed its claim and recovers the full amount of the claim asserted. The reason for the emphasis in the proceeding sentence, is due to the difficulty of getting exactly what you swore was due. Claimants should be as accurate as possible when asserting claims, otherwise this statute will not apply.

The above are just a few of the many nuances contained and embedded in the Louisiana Public Works Act. Each step of the process should be carefully traversed so that the contractor does not lose rights to collect if/when the general contractor or public entity runs out of funding.

Enhanced by Zemanta
Posted in:     About Our Services, Common Topics, Construction Contracts, Filing Requirements, Litigation, Louisiana, Regulations, State & Federal Contracting, State Bond Claims  /  Tags: , , , , , , , , , ,   /   Leave a comment

Louisiana Contractors & State Licensing – Home Improvement

Just the other day here at Wolfe Law Group, I had to do so research for a client on the licensing rules for contractors. I deal with these rules daily but this client’s issue helped to refresh me. This got me thinking that many contractors and hiring parties do not necessarily know the rules that govern contractors of all types. Here in Louisiana, contractor licensing law is governed by the State Licensing Board for Contractors (SLBC). The actual statues are codified in La R.S. 37:2150 et seq.

Today’s post focuses in on a classification called Home Improvement Contracting. Home Improvement Contractors (La R.S. 37:2175.1 et seq) need to have a “certificate” (not a full license) with the SLBC to perform any home improvement contracting services in excess of $7,500 but below $75,000. These contracts need to be in writing and include: 1) full agreement between owner and contractor, 2) full name, address and registration number of the contractor, 3) detailed list of work and materials, 4) total to be paid & how the costs will be paid, and 5) finally signatures of all parties. Finally the owner needs a copy of the contract documents before any work can start. See La R.S. 37:2175.1 for complete list.

This seems like a very commonsensical list, but you will be surprise how many parties get this wrong and/or miss out on critical elements. The contract will not be deemed invalid if an aspect is missing but the rules need to be followed.

Residential contractors need to be registered with the SLBC. The contractor needs to make a written application with the SLBC, under oath. The application needs to include the following information in addition to proof of workers compensation insurance:

(B)(1) The applicant’s name, home address, business address, and social security number.

(2) The names and addresses of any and all owners, partners, or trustees of the applicant including, in case of corporate entities, the names and addresses of any and all officers, directors, and principal shareholders. This Section shall not apply to publicly traded companies.

(3) A statement whether the applicant has ever been previously registered in the state as a home improvement contractor, under what other names he was previously registered, whether there have been previous judgments or arbitration awards against him, and whether his registration has ever been suspended or revoked.

La. R.S. 37:2175.2

The requirements for granting this certification are more relaxed than the normal contractors license but there are grounds for denial and/or revocation.

If contractors are performing projects that fall within the $7,500-$75,000 window on residential improvements and they get caught for not being registered or not having the proper certification there are penalties. Penalties include administrative costs for hearings and a maximum of 25% of the contract price for the violating party. This could essentially mean thousands of dollars in addition to any causes of action that the homeowner may have against the violating contractor.

Finally, and most importantly for contractors, it is easy to get this certification. If a contractor is not properly licensed to be a home improvement contractor, and that contractor is not paid on the home improvement project, that contractor is legally prohibited from filing a lien on the project! (See La R.S. 37:2175.6) This is very important if you are a contractor trying to get paid. The homeowner can rip you off with very little recourse.

Bottom line: if you are a contractor who deals in home improvement, it is easy to get your home improvement license with the state. It will give you protections and keep you legal. Further, if you are a homeowner and know or suspect your contractor is not properly licensed, you have the SLBC to help protect you and penalize the offending contractor. I help contractors get this registration and I’ve also helped homeowners turn in violating contractors.

Posted in:     Construction Contracts, Construction News, Filing Requirements, Licensing, Louisiana, Regulations  /  Tags: , , , ,   /   1 Comment