What Happens After I Record My Lien? - Louisiana Webinar

In this webinar, presented by SunRay Construction Solutions and legal expert Denise Puente, we’ll cover the key steps after recording a lien in Louisiana, including the impact of public vs. private projects, lien deadlines, waivers, and bonding out liens.

We’ll also review important considerations when signing lien waivers with pay applications, ensuring rights aren’t unintentionally waived. Finally, we’ll discuss enforcement, including filing a lawsuit, potential recovery options, and key legal factors.  

Public vs. Private Works

Understanding the Difference

Identifying whether a project is public or private depends on ownership. Public works projects involve government entities such as the State of Louisiana, the Department of Transportation and Development, Facility Planning and Control, or local governments like the City of New Orleans or Jefferson Parish. School boards and other public bodies also fall under this category. Projects put out for bid by these entities are classified as public works.

Private works projects include developments such as hotels, apartment buildings, and condominiums. Confusion can arise when state or federal funds are involved, but the determining factor remains ownership.

Examples of Ownership Distinctions

For instance, the UNO Alumni Foundation constructed a dormitory on the University of New Orleans campus. Although located on public university property, the dormitory was privately owned, making it a private project. Similarly, projects utilizing tax credits or state incentives do not automatically qualify as public works. Recognizing this distinction is essential, as it influences lien filing procedures, enforceability, and required notices.

Lien Recording Deadlines

Public Works Act Deadlines

For public works projects, lien filing deadlines are strictly regulated. Under the Public Works Act, a lien must be filed within 45 days from the recordation of the acceptance of the prime contract or the termination of the prime contractor. Unlike federal Miller Act projects, which base deadlines on individual work completion, Louisiana public works deadlines are tied to the project’s overall completion.

Limitations on Public Projects

Liens cannot be placed on public buildings themselves. Instead, general contractors are required to provide payment and performance bonds. The payment bond ensures that subcontractors and suppliers receive payment if statutory requirements are met. Failure to send a claim on bond within the deadline may result in the loss of a claim against the bonding company. However, a breach of contract claim remains available against the direct contracting party.

The Private Works Act

Notice of Contract Requirements

• Names and addresses of the owner and contractor

• A legal property description

• The contract price and payment method

• The payment schedule

For private projects, general contractors must record a Notice of Contract before on-site work begins if the contract exceeds $100,000. Failure to record this notice results in the loss of lien rights. The Notice of Contract must include:

• Names and addresses of the owner and contractor

• A legal property description

• The contract price and payment method

• The payment schedule

If the owner is unresponsive, contractors may record the full contract, provided it contains a legal property description.

Deadlines Under the Private Works Act

If a Notice of Contract is recorded, the general contractor has 60 days from project acceptance to file a lien. If no Notice of Termination is recorded, the contractor has seven months from substantial completion or abandonment to file. Subcontractors and suppliers maintain a 60-day filing deadline.

Types of Lien Waivers

Lien waivers play a crucial role in payment security. Common types include:

• Standard waivers – Release lien rights for payments received

• Conditional waivers – Become effective only upon payment

• Unconditional waivers – Can release all claims, including unpaid amounts

What to Watch for When Signing

Before signing a lien waiver, it is important to verify:

• Scope – Does it cover only past payments or future amounts?

• Effective date – Does it apply to prior or current pay applications?

• Pending claims – Ensure no unresolved claims are waived

Bonding Out Liens

How It Works

When a subcontractor files a lien, it can cause complications for the general contractor and owner. General contractors may address this by making payments, negotiating a release, or bonding out the lien.

Bonding out a lien involves securing a surety bond worth 125% of the lien amount, allowing the court to cancel the lien, even without the claimant’s consent.

Suing the Surety

If bonded out, the subcontractor must sue the surety issuing the release of lien bond. If a general payment bond exists, the subcontractor can sue both the payment bond surety and the release of lien bond surety.

Filing a Lawsuit to Enforce a Lien

When and How to File Suit

To enforce a lien, timely legal action is required:

• Public projects – A lawsuit must be filed within one year from project acceptance or default notice.

• Private projects – A lawsuit must be filed within one year from lien recording.

Notice of Lis Pendens

For private projects, filing a Notice of Lis Pendens is critical. This notice alerts potential buyers or lenders of pending litigation, preventing unauthorized property transfers.

Prompt Pay Statutes & Attorney’s Fees

Payment Timelines

Subcontractors must be paid within 15 days of the contractor receiving payment. Unjustified delays may result in liability for attorney’s fees and penalties.

Attorney’s Fees

Attorney’s fees are recoverable if allowed by contract or statute. In cases involving a surety, full recovery of a lien claim may entitle the claimant to interest and attorney’s fees.

Key Takeaway

After recording a lien, the most critical step is initiating legal action if payment remains unresolved. Understanding lien enforcement, breach of contract claims, prompt pay statutes, and notice requirements significantly enhances the likelihood of recovering owed payments.

Frequently Asked Questions (FAQs)

1. If the preliminary notice deadline is missed, can a lien still be filed?

It depends. Equipment lessors typically lose lien rights if the deadline is missed, but subcontractors and suppliers may still have valid claims.

2. Do lien priorities matter?

Yes. If a mortgage is recorded before work begins, it holds priority. However, if a project starts before a mortgage is recorded, lien rights may take precedence.