In The Pipeline – Changes in Louisiana Construction Law

Louisiana State Capitol, Baton Rouge
Louisiana State Capitol, Baton Rouge (Photo credit: Wikipedia)

If there is any one constant in the legal profession, it is that the law is an ever-evolving, dynamic thing. While there are some general principles that tend to not change all that drastically over the years, the devil truly is in the details. Having to keep abreast of these changes is why you’ll hear people refer to the “practice” of law – we attorneys must continue to learn and adapt as we continue through our careers. Here at Wolfe Law Group, we make sure to have our ears to the ground in order to provide the most up-to-date information for our clients and their businesses. This legislative session, there are several proposed changes in Louisiana construction law, all of which may critically impact how contractors do business in this state. This post is the first of two parts discussing those changes.

 Proposed Changes to the Private Works Act

There are currently three bills in various stages of the legislative process that would significantly change how different parties secure their rights to payment. The first, Senate Bill 183, is the furthest along of the three, having successfully passed through the Senate and out of the House Committee on Civil Law and Procedure. It is the only bill this session, and the first bill since 1999, that seeks to amend La. R.S. 9:4802. This statute outlines which parties are entitled to assert claims for payment against an owner and a contractor. Should this bill become law (which is likely given the total lack of opposition in the Senate or in the House Committee), lessors of movables would be required to provide formal notice to contractors and owners within 10 days of their materials being used on a project, as opposed to simple delivery of a lease. This change might sound insignificant, but it is because of that very reason why it is important for us to keep our clients informed. Without paying proper attention to how the law evolves, current or potential clients might lose their ability to secure payment because they were unaware of this formalizing shift in the law.

The other two bills, House Bill 190 and House Bill 362, propose changes to La. R.S. 9:4822. This statute is arguably the most important in the Private Works Act because it outlines and defines the time and notice requirements that must be met in order for parties to secure their right to make a claim to secure payment. House Bill 190 has passed through the House and awaits a vote in the Senate Committee on the Judiciary. This bill proposes the least significant of changes, merely stating clearly that statements of claim and privilege need not have attached copies of unpaid invoices unless the statement specifically states they are attached. House Bill 362, however, would extend the time requirements for parties to file their claims by double. When notices of contract have been properly filed and you are one of the parties entitled to a privilege by La. R.S. 9:4802, you would have sixty (60) days to file your claim after the notice of termination, as opposed to the current thirty (30) day window. If you are a contractor that properly filed your notice of contract (if necessary), you would have one hundred twenty (120) days to file your claim following termination or substantial completion, instead of the current sixty (60) day window. These deadlines are extended throughout the statute: all 30 day limits are changed to 60 days, and all 60 days are changed to 120 days. The success of this bill has yet to be seen: unlike the others, it hasn’t even made it out of committee yet, and the session is fast coming to a close.

An Easing of Home Improvement Contracting Registration

Securing and maintaining the proper licensing and registration is incredibly important in the construction world here in Louisiana. The knowledge and expertise required in performing such work or providing these services is why it is always recommended that people seek out professional assistance, especially for work around the home. Surprisingly, and not necessarily wisely, Senate Bill 81 proposes to modify the status quo in relaxing registration requirement for home improvement contracting. Currently, no person shall undertake or perform or agree to perform home improvement contracting services unless they are registered with the Residential Building Contractors Subcommittee of the State Licensing Board for Contractors as a home improvement contractor. The proposed law (which unanimously passed the Senate and is scheduled for floor debate in the House on May 16th), adds the following exception to La. R.S. 37:2175.2:

No individual shall undertake on his own property self-performed home improvement contracting services having a value in excess of seven thousand five hundred dollars unless registered with and approved by the Residential Building Contractors Subcommittee of the State Licensing Board for Contractors as a home improvement contractor.

Basically, the legislature is trying to make it easier for a homeowner to perform certain work on his or her property without having to go through the necessary registration channels. While this might not be an issue for some, it is worrying that something as particularized as home construction may be continuing down a path of non-regulation. The true extent of this relaxation, of course, will remain to be seen.

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Cut Your Risks: Build – or Rebuild – Sustainably

This article was contributed by Carrie Van Brunt-Wiley, Editor of the HomeownersInsurance.com blog. Carrie has been writing insurance news and consumer information for HomeInsurance.com since 2008. She graduated from the University of North Carolina in Wilmington in 2005 with a B.A. in Professional Writing and Journalism.

Green building practices do more than protect the environment, and smart homeowners have more than energy savings to gain when they strive to comply with LEED requirements. Homes built with sustainable, energy-efficient materials are proving to be less vulnerable to wind, hail and water, making them better investments for homebuyers and more attractive to insurers seeking to lessen risk. This could mean lower insurance premiums for homeowners who take steps to increase their homes’ sustainability.  

Shelter from the storm

Extreme weather is nothing new to Louisiana, but the devastation wrought by Hurricane Katrina was particularly severe.  The need to rethink building practices became all too clear overnight. If there is a silver lining to be found in the Katrina disaster, it’s that those communities devastated by the hurricane have had – and still have – the opportunity to rebuild in such a way that should make them better able to withstand the next storm that blows through.

The Insurance Information Institute (III) reports an average cost of more than $6,000 to mitigate an insurance claim caused by severe weather. According to the III, Hurricane Katrina cost $16.2 billion in insurance claims, averaging $96,821 each. Consider how much lower this might have been if more homes and businesses had been built using impact-resistant roofing materials such as aluminum or steel that can withstand not only fire but wind, hail and flying debris. Some insurance companies already offer premium discounts to Louisiana homeowners who install these roofing upgrades.

It pays to upgrade your home

Water damage claims typically cost insurance companies around $7,000, according to the III, and make up almost 25% of homeowners claims in the U.S.  In an effort to bring this average down, some insurance companies may offer lower premiums for homes that earn Indoor Water Efficiency points by complying with the LEED v2009 requirement of 20% water savings.

Following are some other upgrades that could lower your homeowners insurance costs:

  • New plumbing systems
  • Updated HVAC systems
  • Modernized electrical systems

Updating these systems in your home can help you avoid expensive water damage, mold and fire claims. Insurance companies recognize that you are lowering your chance of filing claims and are likely to reward your efforts.

The benefits of green building are so great that some homeowners insurance companies now offer green replacement coverage for standard homes.  If a non-LEED certified home is damaged or devastated by covered peril, green replacement covers the cost to rebuild using sustainable, energy-efficient materials.

Savvy homeowners know that saving energy and materials are the underlying reasons to go green. But they also understand that the value of sustainable building goes beyond those savings. One way you could realize that value is by lowering your home insurance risk, which could mean lower home insurance premiums.

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Missed Your Lien Deadline – What Now?

True:  deadlines dictate when it comes to securing your lien rights.

False: missing a deadline precludes you from ever recovering the money you are owed.

In the construction world, there is no doubt that the deadlines for securing your lien rights are rigid and unforgiving. If you have not filed your lien by the applicable date, you have relinquished that right permanently. This should not be interpreted, though, as having lost your ability to ever collect the money that is owed to you or your company. There is still a way!

Liens Are One (Important) Part of a Bigger Picture

There is no overstating the significance of the mechanic’s lien. It is the most efficient way of making sure that you are paid for the work performed or materials supplied on a project. It allows you to hold all parties accountable and is a very effective way of securing due payment. Understandably, there are strict guidelines that control how this right can be maintained and enforced. Sometimes, these guidelines are not met and the lien option is no longer viable. All is not lost, however.

If the enforcement of a lien were the only way a contractor or subcontractor could recover from another party, there would be a great many unhappy contractors or subcontractors! Thankfully, petitioning a court to enforce one’s lien is usually just one of many bases for recovery.

The most important piece(s) of paper that you will have in your possession during and after a project is your contract. We’ve discussed in multiple posts the importance of your contract and provisions that should be included in them. Your contract is your law, and it is law that you get to write. When an owner fails to pay for the work performed by the contractor (or contractor to the subcontractor), they have broken the law, and courts do not look favorably upon those who break the law. If your contract is clearly expressed and signed by both parties, then any breach of that contract will allow the other party to recover, regardless of any lien in place.

Maybe the court determines that there is no “contract” in place, though. What then? Again, all is not lost. Still looking at the bigger picture, there is the chance the court will find that an open account exists. What is that? According to La. R.S. 9:2781, an open account “includes any account for which a part or all of the balance is past due, whether or not the account reflects one or more transactions and whether or not at the time of contracting the parties expected future transactions.” So, if you’ve performed the work and haven’t been paid, even if you don’t have a lien, you can still recover on this principle.

The “Back Door Lien”

Once in a blue moon you’ll come across a situation where you have missed your deadline to file a lien, but circumstances are such that a potentially even more powerful remedy is available to you: attaching property. Don’t get me wrong – the planets need to align fairly nicely for this to happen, but it is something that came up recently and is worth mentioning.

A client recently came to me seeking to have a lien placed on property. However, the work had been completed several months prior, so the lien deadline had passed. As usual, I began looking into the above claims, and others. This client, though, was particularly concerned because the debtor was preparing to dispose of the property in one manner or another. A lien on the property would have prevented that from happening, but this was not an option. Instead, Louisiana Code of Civil Procedure article 3541 could be utilized and, along with the filing of the above and similar claims (breach of contact, open account), you could also request a writ of attachment. In the simplest terms, when this writ is granted, the property (or the person depending on the situation) is seized, thus preventing the debtor from disposing of it to avoid payment of the debt. It’s a costly method of recovering money owed, but one that rather severely drives home the point that in this state, neglecting your obligations is seriously frowned upon and comes with consequences just as serious.

 

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