La R.S. 9:4811 of the Louisiana Private Works Act requires general contractors to record its contract whenever a project amount is in excess of $25,000. The contract must be recorded before any work begins on the project, and must reference a legal property description.
If the general contractor does not timely record the contract, the general contractor forfeits any rights to lien the project.
In 2003, however, the Louisiana 1st Circuit Court of Appeals made a tiny exception to this statutory requirement. In Burdette v. Drushell, 837 So.2d 54 (La App 1st Cir 2003), the court allowed a general contractor who did not timely file the contract to file a mechanics lien under limited conditions.
The condition? The GC could only lien for work it or its employees actually performed.
In the Burdette case, for example, the general contractor was allowed to lien for carpentry services he actually performed (and did not sub out), but not for services or materials that were furnished by subcontractors.
The work performed by the GC itself was fashioned by the court as creating an ordinary labor lien, which did not require the contract’s filing.
This case was cited and distinguished just last week by the Louisiana 3rd Circuit in Tee It Up Golf Inc v. Bayou State Construction LLC. We wrote about this case in more detail at the Louisiana Construction Law blog here: Details Matter When Filing Liens.
Insofar as the Burdette exception is concerned, however, the Tee It Up Golf case is important because it indicated a requirement for general contractors to displine themselves when filing liens on projects wehre it did not record a contract.
For example – If a GC is owed a total of $200,000 on a project, but only $25,000 of that amount relates to services or materials it actually provided, it must only file the lien for $25,000 to take advantage of the Burdette exception. In the Tee It Up Golf case, the general contractor could not take advantage of the Burdette exception because it lien included labor performed by the GC itself, along with a host of other charges.
It takes a lot of discipline for a general contractor to roll back the amount due and lien for only the labor it actually furnished. However, if the GC didn’t file the notice of contract and wants to lien the project, it is the only way to successfully do so.