Receiving payment for a construction project can be difficult. If you are a subcontractor or material supplier, you probably rely on a third party to provide your payment. While a property owner might pay a general contractor, you might not always receive your part of the check. If this happens to you, consider filing a mechanic’s lien on the property.
What is a mechanic’s lien?
A lien is a right to possess someone else’s property until the property owner pays off a debt. A mechanic’s lien provides this right to people who provided labor or materials to improve the property. Generally, it is placed on a property by a general contractor, subcontractor or supplier. A property owner must pay off the lien before selling the property. A court can also require the property owner to sell the property to pay for his or her debts.
Even if a property owner pays a general contractor, a subcontractor or supplier can still file a mechanic’s lien on the property for failure to receive their part of the payment. It might seem unfair for a property owner to pay twice, but the law allows the property owner to then sue the general contractor. This ensures everyone is paid for the labor and materials involved in improving the property.
What steps do you need to take?
First, you’ll need to fill out a mechanic’s lien form. These forms are not all the same and can vary between states. Consider consulting with a construction attorney to help you draft your lien.
Second, file the mechanic’s lien with the county recorder. It is important that you do this in the county the property is located in.
Finally, serve the mechanic’s lien on the property owner. It is important you do this within one to two weeks after recording the mechanic’s lien with the county. Once you do this, you wait to receive payment from the property owner or begin legal proceedings.
The statute of limitations in Louisiana to file a mechanic’s lien is 60 days after substantial completion of the project or 30 days if the general contractor or property owner files a substantial completion notice. The party filing the mechanic’s lien has up to one year after filing to either come to an agreement with the property owner or enforce the lien in court. It is important to monitor this time in order to bring a lawsuit before it is too late.