What Subs Should Know about Liens

While subcontractors often feel that they are at the bottom of the construction world’s food chain, nearly every state protects them against non-payment with powerful lien laws. To utilize the force of these laws, however, its imperative to understand their scope and requirements.

In Louisiana, the Private Works Act allows a subcontractor to lien a project to ensure prompt payment from both general contractors and property owners. While the actual filing of a lien is important, it’s only the first step and it alone may not result in payment.

There is really no way to “enforce” a lien. A lien is simply a way for the contractor or subcontractor to protect its rights for payment. The step itself, however, is very important. Filing a lien formally notifies the property owner that the general contractor is not timely paying its laborers, and more importantly, that legal action can be commenced against them if a payment is not timely received.

Accordingly, if a subcontractor does not timely file a lien on a project, it cannot later seek payment from the owner of the property for the unpaid work. However, if a lien is timely filed, not only can the subcontractor bring suit against the general, but it may also sue the property owner directly. The lien, in other words, puts all parties on notice that there is unpaid work.

The significance of knowing and following lien laws is it will help your company to be more efficient in the collection of payment on projects. Lien laws are very technical and strict in Louisiana. The Private Works Act requires liens to be in writing, signed by the person asserting the claim, reasonable as to the amount owed with the amount itemized as best as possible. The lien must include a legal property description and description of work completed, and filed with the clerk of court or recorder of mortgages in the parish where the property is located.

While the Lien Laws are crafted to strongly favor subcontractors in a construction project, they do require careful attention to detail. It is very important to file the lien within the appropriate amount of time, which, depending on the project, is either thirty or sixty days, and to follow-up after filing.

When used correctly, liens are a powerful tool for subcontractors, and properly filed liens will ensure that those parties controlling the money do not abuse those who are working hardest on the projects.