The many parties to a construction project — project owners, contractors, subcontractors and suppliers — generally contract with one another to provide goods or services in exchange for payment. It would be nice to think that all construction projects in Louisiana run without a hitch and everyone is paid on time. However, this doesn’t always happen. There are legal remedies for this, however, including the filing of a lien.
Essentially, a lien is a legal claim a person or organization has to a piece of property, to recover unpaid debts if the property is foreclosed upon. Specifically, when it comes to construction law, if contractors are not paid what they are owed, they may file a mechanic’s lien against the property. A mechanic’s lien can also be filed if a contractor does not pay subcontractors.
To obtain a mechanic’s lien, some general steps must be followed. First, the contractor or subcontractor must provide the property owner notice of what work was done, and this notice must be given within a certain timeframe. If the contractor or subcontractor does not receive payment, they can file a mechanic’s lien in the county where the property lies. Finally, the contractor or subcontractor has a certain time period to reach an agreement with the property owner. If this doesn’t happen, the contractor or subcontractor can then pursue a lawsuit.
This is only a very basic overview of mechanic’s liens. Mechanic’s liens give contractors and subcontractors a security interest in the property, and, if it is foreclosed upon, the proceeds of the foreclosure sale will be used to satisfy the lien. However, the process of obtaining and satisfying a mechanic’s lien is a legal process, and, as such, contractors and subcontractors seeking a mechanic’s lien will want to make sure they understand what laws and regulations apply to their case before proceeding.