When a state requires preliminary notices, they very frequently do not require them from pure laborers. And in some states, like Oregon, a laborer’s lien gets super-priority over other liens and encumbrances (like bank mortgages).

In other words, if a laborer or construction company employee does work on a construction project is unpaid, he or she has a very real and powerful remedy in mechanic lien laws. There is no need to figure out whether the laborer’s work qualifies them to file a mechanic’s lien (as it is required regarding other work types), if someone is performing labor on a construction project, they have lien protection.

Despite this substantial protection, the laborer very, very rarely files a mechanic’s lien. So either laborers are always getting paid on the project (doubtful!) or there is something else causing this.

I can think of a few reasons why laborers rarely file liens.  They typically don’t have the finances of a contractor or supplier, and so they can’t afford a lawyer and the cost of a lien. Also, they are typically less experienced in legal remedies like liens, and don’t know where to start to protect their rights.

Anyone else have any insight or reasons why laborers so infrequently file liens?

The Internet has placed legal information and legal forms at our fingertips – and its easy to forget sometimes that the law is a very complicated subject, and legal forms are no exception.  While a legal form may seem simple on its face, the blanks can carry significant legal consequences.

It’s always great to hire an attorney to draft legal documents from scratch, or to “tweak” legal forms to fit your particular need.   The costs associated with legal counsel, however, are simply sometimes out of your business’ reach.

Legal Document preparation services like Zlien are perfect for these situations.  Our staffs of professionals are familiar with the forms that relate to your construction project, and we can help you draft & file your forms properly and avoid costly mistakes.

In Louisiana, the lien statutes are drafted with a certain balance. On the one hand, the statutes were created to grant those involved with the construction of a project a privilege on the properties they build or improve. On the other hand, however, the statutes have mechanisms within to protect the property owners from being liened improperly, or otherwise without notice.

Unfortunately, the notice requirements are oftentimes confusing and technical. It is important, however, that your organization understand the notice requirements of the Private Works Act.

Contracting with the Owner / Resident

The type of notice required is called the “Notice of Lien Rights.”

This notice, again, is required when the following elements are present:

1) Work is being done on a residence;
2) You contracted directly with the owner of the residence. In other words, you are not subcontractor on the project;
3) The owner lives in the residence.

The Notice of Lien Rights to be sent to owners in residential projects is very important, because the law requires that it be provided before work begins, and not as a condition to your construction contract.

Lessor of Equipment or Other Movables

For example, if you lease equipment to a subcontractor, you are not required to deliver an additional copy of the lease to the subcontractor within 10 days of delivery because they will – presumably – already have a copy of the lease. However, you would be required to send a copy of the lease to the general contractor and the owner.

This puts those other parties on notice that you have leased equipment/movables to someone for the work at the jobsite, and if such notice is sent, you will have preserved your right to file a lien in the case of non-payment.

Seller of Movables / Materials / Equipment / Etc.

If the materials sold are incorporated into a commercial project, there are no notice requirements.

If the materials sold are incorporated into a residential project, and you would be liening a residence, LA RS 9:4802(G)(2)-(3) requires that you deliver a notice of nonpayment to the owner of the property at least ten (10) days before filing the lien. The notice must:

There are some customers or prime contractors who will not pay you after a significant amount of work, labor, services and materials have been invested into performing a job. The founder of Zlien’s father and grandfather were both general contractors in New Orleans, LA, so we know your frustration.

The best way to collect on these non-paying accounts is to begin collecting quickly and thereby motivating the debtor to resolve your claim.

Mechanic’s liens – the documents created and filed by Zlien – are inexpensive and hard-hitting. These filings put restrictions on the job-site property, they entangle the owner with your dispute, they can freeze public funding, and more.

You may be pressured to hold-off on filing your lien and beginning the process of collecting on your account receivable. Homeowners may attempt to postpone payment by promising future funding, and many general contractors – perhaps pointing to a “pay when paid” clause – may promise payment once it gets paid on the job.

These “hold ups” on payment – even when legitimate or well-reasoned – will not suspend the short and strict time period you have to file your lien. If you wait too long, you may lose your right to file a lien – and that means you lose the ability to inexpensivly take this important step in collecting on an account receivable and in preserving your rights against all parties funding the project.

Filing a lien will stake your claim. If you were hired by the Owner, it will restrict the owner’s ability to abandon, sell or otherwise transfer the property. If you were hired by the Contractor, a filed lien gives you the right to not only seek payment from the Contractor, but also from the Owner, thereby increasing your chances of getting paid.

Not only is the founder of Zlien the son and grandson of general contractors, but he is also a successful construction attorney licensed to practice law in both Louisiana and Washington. Scott Wolfe, Jr. was named as a Top 50 New Orleans Attorney in 2006 and 2007.

Zlien makes filing a mechanic’s lien fast and easy, and we have the experience and knowledge to help you get paid on a non-paying construction job.

There is some question in Louisiana jurisprudence as to whether these provisions are enforceable or unenforceable.

The 2004 5th Circuit Court of Appeals case that muddied the water on this issue was captioned Shaw Constructors v. ICF Kaiser Engineers, Inc. In deciding whether a pre-work lien wavier would be valid, the court turned to Louisiana jurisprudence on the requirements for a valid waiver in general.

Generally speaking, a “waiver” in Louisiana occurs only when there is “an existing right, a knowledge of its existence and an actual intention to relinquish it or conduct so inconsistent with the intent to enforce the right as to induce a reasonable belief that it has been relinquished.” Steptore v. Masco Constr. Co., Inc., 643 So.2d 1213, 1216 (La. 1994).

In Shaw Constructors, the court reasoned that when the subcontract at issue was formed, Shaw had no known existing legal right to file a claim or lien against the property because no work had been performed. Without an “existing right” to file the lien, there could not be a waiver of that right.

The Court also attacked the pre-work lien waiver from a different angle, by reasoning that the defendants had an obligation to pay Shaw under the contract wherein Shaw waived its lien rights. By not paying its subcontractor, it failed to perform on an obligation of the contract, thereby giving Shaw the right to dissolve the contract entirely. The dissolution of the contract would, according to the 5th Circuit, also dissolve the lien waiver.

The 5th Circuit Court of Appeals therefore held that the lien waiver provision could not be enforced against Shaw.

This ruling should not affect the enforceability of lien waivers executed by subcontractors or suppliers after work is performed.

In contrast to pre-work waivers, post-work waivers occur after the right to lien has vested with the subcontractor/supplier. As a result, the subcontractor or supplier has an actual right to waive, and the waiver would likely be valid.

Furthermore, it is worthwhile to note that while the Shaw decision weighs heavily against “no liens” clauses in contracts, it’s not necessarily the final word on the issue.

First, Shaw was decided by the Federal 5th Circuit and not by a Louisiana court. In its decision, the 5th Circuit simply attempts to “predict” what a state court would do if faced with the same legal question. If and when the “no liens” clause issue gets to the state courts, there might be a different outcome.

Second, the Shaw court hints that circumstances might exist when it would uphold a “no liens” clause. In its comparison of the Louisiana Private Works Act to the similar statutes in Illinois, the court highlights that subcontractors and suppliers in Louisiana can lien a project even when there is no breach in the contract. If a sub or supplier finds itself in this situation, and his claim rights were vested at the time of signing the contract, it is possible that the “no liens” clause would be enforced against it.

For all intents and purposes, however, the Shaw decision places great restraints on “no liens” clauses in contracts.

Generals may want to explore other methods of protecting jobs against liens, and will specifically want to get post-work lien waivers from the subs and supplier regardless of whether they have a pre-work lien waiver.

On the other hand, subs and suppliers should discuss their lien rights with an attorney before the expiration of their claim period even if they signed a contract with a “no liens” clause.