I practice law in Louisiana, and I had another equipment rental company call my offices last week to discuss their options in collecting a debt for some leased equipment.  Whenever I’m contacted to help collect a debt, I immediately discuss the potential client’s lien rights.  Bar none, filing a mechanic’s lien is the absolute best first-step to collect a debt.

This particular potential client had leased equipment, the equipment was used on a construction project, and this company was within the statutory lien period.  Everything was in line for them to file a mechanic’s lien…except for one little, but massively important thing:  they didn’t send a Notice of Lease.

“A notice of what?” they asked.  And rightly so.

Typically, Louisiana a non-notice state, meaning that folks can file mechanics liens without delivering any preliminary notices.  There are two small exceptions:  (1) Prime contractors must file a Notice of Contract when starting work; and (2) Equipment rental companies must deliver a Notice of Lease within 10 days of renting equipment or machinery.

To put it lightly, these two exceptions aren’t well known in Louisiana.

In fact, this particular client had leased heavy construction machinery for about twenty years, and had never heard of the requirement. The requirement, however, is certainly there, nestled within La. R.S. 9:4802(G)(1), mandating as follows:

G.(1)  For the privilege under this Section to arise, the lessor of the movables shall deliver a copy of the lease to the owner and to the contractor not more than ten days after the movables are first placed at the site of the immovable for use in a work.

We wrote about this “Notice of Lease” requirement on this blog before, and you can take a look at the Notice of Lease tag.

Since the Notice of Lease must contain certain information, the best practice is to simply sent the written lease itself to the receiving party.  According to the statute, the lease must be delivered “to the owner and to the contractor,” but another best practice is to send the notice along to any and everyone up your contracting chain.  The lease must be sent along to the required parties by certified or registered mail.

The notice must be sent within 10 days of when the equipment or machinery is first placed at the jobsite.  If it’s a day too late, or if it’s not sent properly or to the correct parties, it could spell game over for your lien rights.  In other words, don’t overlook or underestimate this requirement!

Chances are you are stuck in rough spot and have to defer to your contract for remedy. There is likely no answer for you under the lien law – unless you filed a notice of lease agreement with the owner within the appropriate time frame.

Lessors often do not learn about the dreaded notice provision until after they have been bitten by a bad customer. Both the Private Works Act and the Public Works Act each require that the Lessor of equipment to a construction project provide advance notice to the owner of the equipment’s use and existence at the jobsite.

Luckily, satisfaction of this requirement is quite simple. Under both Acts, a Lessor of movables (equipment, vehicles, etc.) must “deliver a copy of the lease to the owner not more than ten days after the movables are first placed at the site of the immovable for use in the work.” La. R.S. 38:2242(c). If the job is private and not public, you must also provide a copy of the lease to the contractor. La. R.S. 9:4802(G)(1).

The official comment for subsection G of La. R.S. 9:4802 states that the purpose of this law is to give notice to the owner and the contractor that equipment being used by a contractor is leased and thus potentially creating liability under the Private Works Act.

Though the type of delivery is not specified, it is commonplace to use hand delivery or certified mail. If hand delivery is utilized, it is important that the courier fill out a simple affidavit specifying what was delivered, when it was delivered, who it was delivered to, and where it was delivered.

Finally, the Notice of Lease Agreement does not have to be in any specific form – simply a copy of the contract should suffice. We do prefer that you use a cover sheet to inform the owner and contractor of the purpose of the delivery, reserving your rights under either La. R.S. 9:4802 (Private Works) or La. R.S. 38:2242 (Public Works).

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: