What every subcontractor should know about mechanic’s liens

As a subcontractor, you may be wondering how to obtain relief if a client fails to pay for the work you complete. Understanding some of the basics may help you enforce your right to collect.

Even if you have prior experience or knowledge regarding mechanic’s lien laws in Louisiana, you may need to brush up because in 2019, Louisiana state legislature passed HB 203 modifying the existing laws. As of Jan. 1, 2020, the new legislation went into full effect. Some of the changes were relatively minor, while others may impact you more.

Modification in the Notice of Contract rules

Before 2020, the law required a Notice of Contract for any project over $25,000. Now, that value has increased to $100,000. While this may seem like a welcome relief from additional paperwork, do not let this change make you complacent about filing when necessary. If you do not file the Notice of Contract, you may not be able to pursue remedies such as a mechanic’s lien in the event of nonpayment.

Alteration of the Notice of Termination rules

As a subcontractor, you may feel that you have been at a disadvantage in the communication chain, often remaining in the dark about important developments that may impact you, such as termination of the project. But, the rules have now changed. When you send a request to a property owner for Notice of Termination, failure to comply with your request may result in stronger consequences. This new incentive for property owners may help you stay on top of the things that affect your interests.

Addition of electronic delivery option

The new law now allows for the parties to agree on using electronic delivery for notices. Besides making it easier, cheaper and faster to comply with laws about giving notice, it may also help you stay informed where you once felt left out of the loop.

These are only a few of the recent changes, and a fraction of the topic of mechanic’s lien laws overall. But avoiding missteps in the complex area of construction law may help you prevent losses you cannot afford.