Louisiana
Construction Lending State Compliance Library
State statute reference
Last updated August 2, 2023
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Louisiana Construction Lien Law
Lien Law Overview
The Louisiana Private Works Act, La. R.S. 9.4801 et seq. provides for privileges (liens) in favor of persons who perform work or supply labor or materials in connection with the construction improvement of buildings or other structures. Such privileges arise and are effective as to third persons at the earlier of (a) when the work is begun by placing materials or commencing work at the worksite, or (b) a filing of a notice of contract. Although the Private Works Act privileges can come into existence without any filing, a filing is necessary in order to perfect such rights and render them enforceable; that filing, however, may not occur until after the job is complete, so a lender making a loan secured by a mortgage cannot know, by looking at the public records, whether a later-filed materialmans lien will outrank the mortgage; the only safe harbor” for the lender is to obtain and timely file the “no work” affidavit (download available below).
This affidavit must be in the parish mortgage records within 4 business days after its execution, and the mortgage must be filed of record before or within 4 business days after the filing of the affidavit.
Download Louisiana No Work Affidavit
Fill out the form and the document will be sent to your email.
Disclaimer: This form is provided for informational purposes only and is not intended to be legal advice or establish an attorney-client relationship. It is posted ‘as is’ and we do not warrant that it is the most current version. Users of this form should consult their legal counsel before using this form for their particular transaction.
Lien Waivers
Lien Waiver Summary
Louisiana does not require or restrict lien waivers.
Are title companies required by law to manage construction loan disbursements?
No, but title companies are insurance companies that may require -in exchange for insurance coverage – some level of control over how loan proceeds are disbursed. If they do, the lender either must comply with the title company’s demands or risk not having coverage for the loan (or try another title company, but they tend to share best practices by location/region).
Can a mechanics lien have priority over a pre-existing mortgage in Louisiana?
A prior recorded mortgage will outrank materialmen privileges but will be junior and inferior to liens in favor of taxing authorities for unpaid ad valorem taxes and special assessments and inferior to laborers’ liens. The fact that privileges under the Private Works Act can arise without recordation poses a problem for the potential mortgagee who wishes to insure its priority. A lender acquiring a mortgage on real estate may conclusively rely upon the Louisiana No Work Affidavit. The affidavit must be completed by a registered or certified engineer or surveyor or a licensed architect who states he or she inspected the property at a specified time, and that work has not then been commenced, nor materials placed at the site.
Notices
Notice of Commencement (or similar like event)
Louisiana does not have a Notice of Commencement by this specific name, however, the state does have what is called a Notice of Contract that is similar to the benefits of a Notice of Commencement. The Notice of Contract is required to be filed by the General Contractor before work begins on contracts greater than $100,000.
The Notice of Contract is important because it affects the lien rights of both the General Contractor, Sub-Contractors, and Suppliers. Amount the many benefits of the Notice of Contract, overall it reduces the time parties have to lien a property and dramatically reduces the time they have from when the Notice of Termination is filed.
The Notice of Contract must be filed of record, so a lender should either check for filings or ensure the title company is doing so. Since the Notice of Contract must be filed before work has begun, it may make sense for a lender to require proof of the Notice to Contract and No Work Affidavit.
Notice of Contract by General Contractor. (La. R.S. § 9:4811). Written notice of a contract between a general contractor and an owner must be filed for registry with the recorder of mortgages of the parish of location of the immovable upon which work is to be or has been performed before the contractor begins work on the immovable (the work is “begun” by placing materials at the site of the immovable to be used in the work or conducting other work at the site of the immovable the effect of which is visible from a simple inspection and reasonably indicates that the work has begun).
The notice:
- Shall be signed by the owner and contractor.
- Shall contain a complete property description of the immovable upon which the work is to be performed and the name, if any, of the project.
- Shall identify the parties and give their mailing addresses.
- Shall state the price of the work or, if no price is fixed, describe the method by which the price is to be calculated and give an estimate of it.
- Shall state when payment of the price is to be made.
- Shall describe in general terms the work to be done.
All Notices of Contract must contain a complete property description of the immovable upon which the work is to be or has been performed. A statement of the name of the owner and street address or mailing address of the immovable without more is not sufficient. La. R.S. § 9:4831.
The Notice of Contract must be filed of record, so a lender should either check for filings or ensure the title company is doing so. Since the Notice of Contract must be filed before work is begun, it may make sense for a lender to require proof of the Notice to Contract and No Work Affidavit before closing on the loan.
For projects greater than $100,000
The contractor must file a Notice of Contract or lose his lien rights. The contractor must attach a surety bond to a Notice of Contract.
Who files?
General Contractor
When must it be filed?
Before the contractor begins work
Appoint a Designee?
No. The language required in the Notice of contract is specifically described in the statute.
Posted on Jobsite?
No.
Preliminary Lien Notifications
In Louisiana, the preliminary lien notice requirements vary depending on the role of the project participant. For instance, a general contractor, a design professional, a subcontractor, a material supplier, and an equipment rental company may have different notice requirements in various situations.
As per the state laws, one can obtain lien rights by starting the work, i.e., by placing materials or commencing work at the worksite.
Notice of Completion
In Louisiana, the equivalent is called a Notice of Termination.
In order to register the Notice of Termination for the property where work has been performed, it is necessary to file it with the recorder of mortgages of the parish in which the property is located. It must contain a complete property description of the immovable upon which the work is to be or has been performed. A statement of the name of the owner and street address or mailing address of the immovable without more is not sufficient. La. R.S. § 9:4831.
The notice must be served on all claimants who sent a Notice to Owner of Obligation within 10 days of filing the notice.
Implication if the Owner does NOT file the Notice of Termination:
- The general contractor may institute a summary proceeding against him for a judgment decreeing that the work has been substantially completed or has been abandoned by the owner.
- The failure to file a Notice of Termination can drastically increase the time claimants have to file their statements of claim or privilege, which can prolong the time for claim filings up to seven months past the completion of the work.
Notice of Termination Benefits
- If a Notice of Contract was recorded, the General Contractors will have their time reduced from 7 months to 60 days to record their lien while all other parties will have their time reduced from 6 months to 30 days.
- If a Notice of Contract was NOT recorded, all claimants will have 60 days to record their lien.
- If a Notice of Contract was NOT recorded and a Notice of Termination is NOT recorded, then General Contractors have up to 7 months to record their lien while all other parties have up to 6 months.
The owner, no later than ten days after receipt of a request for its filing from the general contractor.
Additionally, the notice must be served on all claimants who sent a Notice to Owner of Obligation within 10 days of filing the notice.
Title
Louisiana uses ALTA title commitments that allow for the Construction Loan Update Endorsement, which is used when the lender requests endorsements as additional disbursements are made. It gives coverage up to the new outstanding mortgage balance and shows whether any other instruments have been filed and recorded since the last title update. The endorsement also ensures the priority of the insured mortgage over instruments that are not specifically listed in the endorsement. Since the title company has a stake in the disbursements, you may find that they exercise some due diligence relating to construction draws.
Contractor Licensing
The Louisiana State Licensing Board for Contractors governs licensing requirements for construction projects.
A Commercial license is required for commercial projects of fifty thousand dollars ($50,000) or more; one dollar ($1) or more for hazardous materials; or in excess of ten thousand dollars ($10,000) for Plumbing, Electrical or Mechanical. The total value of the project includes the cost of all labor and materials.
A Residential license is required for residential building contractors when the cost of the undertaking exceeds seventy-five thousand dollars ($75,000). Residential contractors are required to submit certificates evidencing workers’ compensation coverage, and general liability insurance in a minimum amount of one hundred thousand dollars ($100,000) during the application and renewal process.
A Mold Remediation license is required for mold remediation for projects exceeding seven thousand five hundred dollars ($7,500) or more. Mold contractors are required to submit certificates evidencing workers’ compensation coverage and general liability insurance in a minimum amount of fifty thousand dollars ($50,000) during the application and renewal process. Home improvement contractors are required to register with the Board in order to perform home improvement work when the total project value (including labor and materials) exceeds seventy-five hundred dollars ($7,500) but does not exceed seventy-five thousand dollars
($75,000).
Contractors who hold a valid building construction or residential construction license with the Board are exempt from this registration requirement. Home improvement contractors are required to submit certificates evidencing workers’ compensation coverage in compliance with Title 23 of the Louisiana Revised Statutes of 1950 and general liability insurance in a minimum amount of one hundred thousand dollars ($100,000) during the application and renewal process.
Home improvement contractors performing work in excess of seventy-five thousand dollars ($75,000), including all labor and materials, are required to be licensed as a residential building contractor.
Bond and Insurance Requirements
To escape liability to claimants that aren’t paid by a general contractor, an owner must require a general contractor to furnish and maintain a bond of a solvent, legal surety for the work to be performed under the contract. The bond shall be attached to the notice of the contract when it is filed. If the contract exceeds $100,000, the bond must be issued by a surety company licensed to do business in this state. La. R.S. § 9:4812.
R.S. 9:4802(C) states: The owner is relieved of the claims against him under this Section and the privileges securing them when the claims arise from the performance of a contract by a general contractor for whom a bond is given and maintained as required by R.S. 9:4812 and when notice of the contract with the bond attached is properly and timely filed as required by R.S. 9:4811.
To be entitled to the benefits of the provisions of R.S. 9:4802(C), every owner shall require a general contractor to furnish and maintain a bond of a solvent, legal surety for the work to be performed under the contract. The bond shall be attached to the notice of the contract when it is filed.
The amount of the bond shall not be less than the following amounts or percentages of the price of the work stipulated or estimated in the contract:
- If the price is not more than ten thousand dollars the amount of the bond shall be one hundred percent of the price.
- If the price is more than ten thousand dollars but not more than one hundred thousand dollars the amount of the bond shall be fifty percent of the price, but not less than ten thousand dollars.
- If the price is more than one hundred thousand dollars but not more than one million dollars the amount of the bond shall be thirty-three and one-third percent of the price, but not less than fifty thousand dollars.
- If the price is more than one million dollars the amount of the bond shall be twenty-five percent of the price, but not less than three hundred thirty-three thousand three hundred thirty-three dollars.
The condition of the bond shall be that the surety guarantees:
- To the owner and to all persons having a claim against the contractor, or to whom the contractor is conventionally liable for work done under the contract, the payment of their claims or of all amounts owed them arising out of the work performed under the contract to which it is attached or for which it is given.
- To the owner, the complete and timely performance of the contract unless such guarantee is expressly excluded by the terms of the bond.
The bond of a legal surety attached to and filed with the notice of contract of a general contractor will be deemed to conform to the requirements of this part notwithstanding any provision of the bond to the contrary, but the surety shall not be bound for a sum in excess of the total amount expressed in the bond.
The bond given in compliance with these requirements will be deemed to include the following conditions:
- Extensions of time for the performance of the work shall not extinguish the obligation of the surety.
- No other amendment to the contract, or change or modification to the work, or impairment of the surety’s rights of subrogation made without the surety’s consent shall extinguish the obligations of the surety, but to the extent that the surety is materially prejudiced by the change or action, the surety shall be relieved of liability to the owner and shall be indemnified by the owner for any loss or damage suffered by the surety.
- A payment by the owner to the contractor before the time required by the contract shall not extinguish the obligation of the surety, but the surety shall be relieved of liability to the owner, and shall be indemnified by the owner for any loss or damage suffered by the surety.
For licensed professionals (architects, electrical contractors, engineers, landscape architects, surveyors, etc.) use https://lslbc.louisiana.gov/contractor-search/
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