Sworn Statement of Amount Due – Louisiana’s Public Lien

Here at Wolfe Law Group, I have been blogging a lot lately on liens for both public and private projects (See other posts here). Anytime a property is owned by and arm of the state then you are dealing with a public project. Although, this seems simple, many contractors do not always see the connection. The reason why so many disputes are happening now is because public projects have dominated in the years of the poor economy. Contractors on these projects need to know the rules so that they can get paid. (see La. R.S. §38:2241 et seq.)

Since the state owns the land, there are no security devices, such as a lien that can attach to the land and call for its foreclosure in the event of default or non-payment. Therefore the state has come up with its own security device to give contractors and laborers a way to collect when not receiving payment.  Here we have the Louisiana coined term: Sworn Statement of Amount Due. La. R.S. §38:2242, which is Louisiana’s version of a public lien. This document needs to be filed by the subcontractor or laborer within 45 days of when the work was accepted by the government body overseeing the project. Id.

One way for a contractor who has a sub on any tier below it to cancel the Sworn Statement of Amount Due filed, is to “bond off” the lien. La R.S. §38:2242.2. This mechanism allows for the higher tier contractor to provide security or cash at an amount 125% of the total lien. Id. At this juncture the property will be clear but there will be evidence of the bonded off lien still held with the parish mortgage office. This is pretty common practice so that higher tier companies keep the bond free while settling disputes with subs.

If at the end of the 45 day window from the state agency signing off on full completion of the project there are still any claims remaining as unpaid, then the state, claimants, or contractors may file a concursus proceeding to have the funds distributed into the registry of the court so that the parties can fight about who deserves the funds. La R.S. §38:2243. Any party may file this action, and its a very powerful tool. This is why many of the contractors will use the mechanism to “bond off” the claims, so as to prevent this process.

Finally, every parties favorite section is where attorney fees are awarded. In the Public Works Act, by statute attorney fees are permissible. This gives all parties the confidence to fight thinking that they will recover the fees. Unfortunately, recovery of attorney fees is still a difficult chore even when there is a statute. Here, La R.S. §38:2246 allows for attorney fees to any claimant who timely and properly filed its claim and recovers the full amount of the claim asserted. The reason for the emphasis in the proceeding sentence, is due to the difficulty of getting exactly what you swore was due. Claimants should be as accurate as possible when asserting claims, otherwise this statute will not apply.

The above are just a few of the many nuances contained and embedded in the Louisiana Public Works Act. Each step of the process should be carefully traversed so that the contractor does not lose rights to collect if/when the general contractor or public entity runs out of funding.

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Construction Lien Removal Suit in Louisiana

Attention all home owners or property owners, there is only one surefire way to have that annoying illegal lien (in Louisiana called a statement of claim and privilege) removed from the title of your property, a Mandamus action. In Louisiana and other states, a Mandamus can be used for a number of things (listed out in La R.S. §44:114) and it is a summary proceeding, meaning that it should go faster than ordinary litigation.

The Louisiana Private Works Act codified in La. R.S. §9:4801 et seq., is the origin of the rules which govern construction liens for private projects in this state. The specific statue that allows for an individual to request a Court to order the Clerk of Court to cancel a lien is La. R.S. §9:4833. The statute reads in pertinent part:

If a statement of claim or privilege is improperly filed or if the claim or privilege preserved by the filing of a statement of claim or privilege is extinguished, an owner or other interested person may require the person who has filed a statement of the claim or privilege to give a written request for cancellation in the manner provided by law directing the recorder of mortgages to cancel the statement of claim or privilege from his records.” La. R.S. §9:4833(A).

The best part about this statute is that if all of the proper notice requirements are followed and the illegal lien is not removed from the mortgage records by other means than this Mandamus proceeding, the property owner who brings the Mandamus suit is entitled to attorney fees and costs. This is huge because, this type of proceeding can cost a homeowner thousands just in legal fees. Here at Wolfe Law Group, we charge a flat rate of $3,500 for this type of proceeding, which covers all things from notices, to the actual Mandamus suit, to the trial.

Liens can be very technical and there are many instances where the letter of the law is not followed. In those instances, an owner can have the lien removed and even against the will of the party who filed the lien. As a contractor, filing a lien is very important to preserve rights against parties it did not contract with who may be liable for payment. Here at Wolfe Law Group we file liens all the time, but if your are like most contractors, funds are short and hiring an attorney can be too costly. Companies like Zlien.com are excellent resources for all things related to liens. Fortunately for lawyers and unfortunately for services like Zlien.com, enforcement of a lien and/or a Mandamus suit for removal of an illegal lien can only be filed by an attorney (or individual if self represented). I recently posted a Petition for Mandamus recently drafted and filed by Wolfe Law Group on JDSupra.com.

Bottom line: owners should file suit to have illegal liens removed from the mortgage records. If not then selling or refinancing the property will be impossible with the cloudy title. If you file suit and receive a judgment then you will be entitled to attorney fees and costs, which are provided by statute.