Louisiana Home Improvement Contractors License Requirements

English: Larose, LA, September 7, 2008 -- Loca...
Larose, LA, September 7, 2008 — (Photo credit: Wikipedia)

The Louisiana State Licensing Board for Contractors (LSLBC) is a very useful place for Louisiana contractors. I was recently reading up on the requirements for home improvement contractors. The LSLBC is a one stop shop for all things related to contractor licensing. It is a good place for both contractors and consumers. Contractors can find out information on commercial, residential, home improvement and mold remediation.

Qualifications for Home Improvement License

All home improvement contracts over five thousand dollars and up to seventy-five thousand dollars need to be in writing. In order to be considered a Home Improvement Contractor you must register with the LSLBC. The application is located at this link. This application is less formal than the Residential Contractor license application. The process is also more relaxed. Further, there is no test.

The contractor who is applying for the Home Improvement license needs to provide general liability insurance and show that the contractor or the registering entity is registered with the Louisiana Department of Revenue.

Of course there are fees associated with this filing but that is very expected. The LSLBC will deliver the certificate of registration to the applicant who has been approved. These certificates are non-transferable.

Persons Who Do Not Need the Home Improvement License

Generally there are persons and entities who do not need the protection of a Home Improvement License. If a homeowner physically performs work on his personal residence then he does not need to get this license, no matter the cost. This does not mean that the homeowner does not need to abide by local permitting rules and regulations.

A contractor can perform work without the Home Improvement license if the home improvement work has a “value” of less than seven thousand five hundred dollars ($7,500). Many times contractors try to circumvent the licensing requirement by making contracts for $7,500 or less when the work is really more than that. The LSLBC rule states that the value to the home must be less than $7,500. This is an objective standard.

Of course other contractors who have a better license do not need this one, such as commercial and residential contractors.

Other Aspects to Consider

Contractors who are getting licensed for the first time should consider contacting an attorney so that they can get protective language put in invoices, and properly drafted contracts. It is always smart to properly form an entity such as and Limited Liability Company (LLC) to protect personal assets. Other helpful documents include demand letters, lien waivers and filing of liens when payment is not received. Companies such as zlien.com are very good with helping contractors manage notice and lien compliance.

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The Best Time to Mediate A Dispute is Yesterday

Eviction ImageHere on ConstuctionLawMonitor.com I like to blog about non-traditional ways to settle disputes between contractors and other feuding parties. Mediation is my favorite because I am a mediator. Its also my favorite because, generally, its the best and most efficient way to resolve disputes. There are circumstances whereby mediation will not work but that usually happens when irrational parties come to the table.

In this post I will explore the element of “when” is a matter ripe for mediation.

Timing Issues For Mediation

As discussed in other posts, there can be clauses within construction contracts wish mandate mediation. This type of clause is called a mediation or alternative dispute clause. In this instance, the contract will lay out exactly how the mediation and/or arbitration process should be handled when an dispute occurs between the parties.

So the timing element of a contractually mandated mediation is spelled out in the construction contract. Many times mediation is a precursor to any litigation or arbitration hearings. This basically works as to when there is a dispute, parties look to the contract to see how the mediation should be initiated.

Outside of contractually mandated mediation there is also voluntary mediation. By definition, all mediation is voluntary. The premise of all mediation proceedings is that the parties are there voluntarily. Otherwise the mediation will not work.

Once the parties are both there in good faith and voluntarily, then the process can work properly. Most mediation proceedings can be completed in one day. Sometimes more complex issues with numerous parties may take a bit longer and may span over a number of days. Either way is fine and the process is designed to facilitate both simple and complex.

Its Okay To Mediate A Dispute More Than Once

Often times parties think they only get one bite at the apple when it comes to mediation. Mediation is different than trial or an arbitration where there does not have to be a final decision made by the neutral party. A mediator is merely a facilitator to settlement. When parties mediate, they have to be the ones who make the final decision to settle.

In my experience, I have seen parties try to mediate disputes early on in the dispute and it did not work out. There was simply an impasse which could not be worked out that particular day. Then the parties dig back in and litigate or negotiate independently. Months and even years later, the parties will come to the table again to mediate and try to work out a deal. As long as the parties are engaged and willing to compromise there is always hope that mediation will work.

Other More Expensive Alternatives To Mediation

There are two main alternatives to mediation. Litigation and Arbitration are what I will discuss.

Litigation

As you may or may not know, litigation is the standard practice here in the United States, but it is old and antiquated. Litigation is also extremely expensive and slow. If a party files suit on a hundred thousand dollar construction dispute it will likely take years to completed. The process is slow and the parties know how to exploit the process so that it will move even slower. The only parties who make money off litigation are attorneys.

One of my favorite quotes regarding how bad litigation is from the French scholar Voltaire,

“I was never ruined but twice; once when I lost a lawsuit and once when I won one.”

Even as far back as the seventeenth century people were opposed to litigation. Needless to say, the process has become worse, not better.

Arbitration

Next is the somewhat better and more favored, arbitration. Arbitration is good because it is more efficient and cost effective than litigation. Parties get to select an arbitrator and then proceed ahead with more relaxed rules than traditional litigation. The problem here is that the arbitrators ruling in binding. Binding is scary because its all left to the discretion of one person.

I’ve experienced a number of arbitration rulings that have left me scratching my head wondering what the arbitrator was listening to. There is the possibility of appeal, but the standard is overwhelming and the ruling is rarely overturned.

Mediation is a voluntary negotiation process where a neutral third party helps to facilitate the parties making an agreement. In my mind this choice is clear to mediate.

 

 

 

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Get An Attorney To Read Your Construction Contract – Every Time

read-construction-contract

At the start of every construction project you sign a stack of papers that will dictate your success or failure on the project: the construction contract.  The contract may be short and sweet, or it may be a mountain of paperwork that not only includes its own provisions but also cites provisions in other paperwork stacks.

Construction contracts are historically confusing documents and they contain a bunch of popular provisions with confusing interpretations like pay when paid clauses, indemnity provisions, claim notice requirements, and more. Plus, the provision may mean one thing under one state law and something completely different under another state’s law.

What can you do?

Get An Attorney To Review Every Contract

Last year, Seth Smiley wrote an article on our blog suggesting that with construction contracts you should “pay now to save later.” The point of this title and article simply underscored the importance of spending a little time with the contract language at the very start of the projects.

Perhaps your company actually pays money for an attorney to review the contract, or maybe they pay by putting in some quality time to review the document themselves. Whatever the case, it’s important to give construction contracts serious review before starting to work underneath it.

Having an attorney review your construction contract does not need to be complicated. In fact, here at Wolfe Law Group, we offer a flat fee for contract review services. Provide the contract documents to us, and we’ll turn around a review in a day or two. The review will include an opinion letter that sets forth two major things:

  • Provisions that should be concerning and perhaps changed (i.e. Alerts)
  • Provisions that require you to perform certain actions during the course of the project (i.e. Notification Lists)
  • Answers to any specific questions you may have

Having an attorney review your contract at the onset of a project will give your company peace of mind about their duties under the terms, and will help your company avoid bad situations.

Don’t Underestimate The Power Of The Contract

It’s unfortunate, but a lot of companies spend a great deal of time preparing their bid and selling their company to get a project. When they finally get the job, the salesperson, estimator, or business owner is ecstatic and just wants to get started. That’s understandable, but don’t allow the owner or general contractor to take advantage of your position and pass you a construction contract that is one-sided against you.

A strong contract that has provisions to the owner’s or general contractor’s favor can be crushing to a business in the event of a dispute, payment delay, or more.

Don’t let your excitement or desire for the project get ahead of you. General contractors and owners will negotiate a contract with you, and they expect push back on certain terms. If you allow them to roll over your company, however, they will.

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Getting Paid – Notice of Contract Filing

English: Discussion about the text Français : ...
(Photo credit: Wikipedia)

So you’ve completed your work but now you’re running into problems getting paid for the job. As most people in that situation are aware, the Private Works Act (should that be the applicable act) provides very specific instructions for preserving your claims and privileges in this situation. In common terms, the PWA allows you to lien property in order to secure your right to payment. What many people do not know, however, is that there are very specific limitations on this preservation of rights. The subject discussed here is one such limitation: the requirement of filing a notice of contract for certain projects. The notice of contract filing is important because, depending on the amount of the contract, the filing date will determine the time period in which one can file a lien. It is a rather nuanced area of the law, but here we’ll break it down piece by piece.

What is a Notice of Contract?

When the homeowner and the contractor execute a contract, in order for certain parties to later preserve their claims and privileges, a notice of contract must be filed with the mortgage office in the parish where the work is being performed. Louisiana Revised Statute 9:4831. The information required to be contained in the notice is outlined in Louisiana Revised Statute 9:4811, and includes: the signatures of the owner and the contractor; the legal property description of the immovable where work is being performed’ the parties to the contract and their mailing addresses; the price; when payment of that price is to be received; and a general description of the work to be done. When information is omitted, the notice will only be found improper if that incorrect or omitted information is either the parties and their addresses or if the immovable is incorrectly identified. In those two scenarios, the notice of contract will be deemed improperly filed.

An important element in determining just what the notice of contract is is also a discussion of what it is not. The notice of contract is not the contract document! When you look through the PWA, the above is the only required information that must be submitted as a “notice of contract.” Depending on the scope of work, the notice of contract might only be one page long! Why is this important? The short answer: money. Let’s use Orleans Parish as an example. In Orleans Parish, filing a notice of contract will cost you $60 for the first two pages and $13 for each page thereafter. If parties were required to file the contract as opposed to a notice of contract, they would be on the hook for hundreds of dollars just in filing fees. In paring down the information needed for the notice, though, the filing can be extraordinarily cheaper.

Why File a Notice of Contract?

The filing of the notice of contract is important because it will help determine when the tolling period begins for filing liens. This is where matters become complicated. First, we must understand that there are numerous parties involved and affected by the filing of the notice. Most straightforward is the contractor. If a contractor does not file a notice of contract for projects that exceed $25,000.00, then that contractor loses his right to later file a lien. La. R.S. 9:4811. Therefore, if the contractor wants to retain the rights granted to him by the PWA, on projects of a certain sum, the notice of contract must be filed before work begins, which is defined by Louisiana Revised Statute 9:4820. If the contractor is entitled to the rights granted by Louisiana Revised Statute 9:4801, and if they have filed the notice of contract properly, then that contractor will have until sixty (60) days after the filing of the notice of termination or after substantial completion to file their lien.

The trickier calculation deals with subcontractors. The first part of Louisiana Revised Statute 9:4822 states that when a notice of contract is filed properly, then those parties granted a privilege by Louisiana Revised Statute 9:4802 (subcontractors, as well as others) will only have thirty (30) days after the filing of the notice of termination to file their lien. Note the very important difference between those provisions. In the case of a subcontractor and a proper notice of contract, the time period to calculate your lien deadline starts when a notice of termination is filed and not when the project is substantially completed. If the notice of contract is not properly filed, then the subcontractor has sixty (60) days from the filing of the notice of termination or from substantial completion to file the lien.

What Does This Mean?

The notice of contract, therefore, is pivotal in determining when a lien period terminates. For example, if a notice of contract is properly filed, but there is never any termination of work filing, a subcontractors lien period might never end. This, obviously, greatly impacts the rights of the parties to the contract. However, it is not a simple issue.

The language of the Private Works Act is very particular and phrases and terms were chosen for a very specific purpose. There is a reason why some places use “filing of notice of termination of work” versus “substantial completion of work” – it is because they are different concepts. There is a reason why there is specific information that must be included in a notice of contract and why that impacts different parties. These statutes were crafted with care and intent. Considering how important they are in determining your rights, the safest thing you can do to protect your business is to discuss the matter with an attorney. After all, we’re here to help.

 

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Louisiana Litigation Strategy: Offer of Judgment

Final OfferWhen litigating in Louisiana, both in State and Federal court there are some interesting tools that can be deployed by both sides of the dispute in order to encourage settlement.

The Louisiana version of this codification is more robust than the Federal one, but both are appropriate for discussion in this post. Federal Rule of Civil Procedure 68 will be talked about in more detail in future posts. For now we will focus on the Louisiana offer of judgment.

Louisiana Civil Code of Procedure Article 790

Even the title of this code article seems a bit confusing, which must be a precursor to the actual article itself. The Louisiana Civil Code Article 790 is entitled “Motion for judgment on offer of judgment.”

I had to sit down and read through this article a few times and read some case law on it to fully get the gist of what the Louisiana Legislature was trying to do when they passed a vote on the language of this article. Surely, the Legislature wanted to create a rule similar to the Federal Rule of Civil Procedure 68. But in true Louisiana fashion, we had to take things a step further.

The most interesting and controversial section is located in subsection C. La CCP 790(c) is creatively written text, it reads:

“C.  If the final judgment obtained by the plaintiff-offeree is at least twenty-five percent less than the amount of the offer of judgment made by the defendant-offeror or if the final judgment obtained against the defendant-offeree is at least twenty-five percent greater than the amount of the offer of judgment made by the plaintiff-offeror, the offeree must pay the offeror’s costs, exclusive of attorney fees, incurred after the offer was made, as fixed by the court.”

Layman’s Reading of Louisiana Offer of Judgment Article

In an effort to clear c0nfusion here, I have broken down the language above into the following formula like sentence:

(1) If the Plaintiff makes an offer to settle to the Defendant, and the final judgment equals more than 25% more than that offer, the Plaintiff is entitled to its costs to be paid by the Defendant for not accepting.

(2) If the Defendant makes an offer to settle and the final judgment equals 25% less than that offer, the Defendant is entitled to its costs to be paid by the Plaintiff for not accepting.

There are a few caveats here. The offer must be made more than 20 days before trial. If a party is awarded costs based on La CCP 970, then its only costs from after the offer is made. Costs are specifically exclusive of attorney fees according to the article.

If the offer is accepted, then the judgement is considered final, but neither party can appeal it due to the fact they both agreed to the offer. In essence, both sides to the litigation can use this article to its favor.

Case Law on Offer of Judgment

The Louisiana Fifth Circuit described the nature of La CCP 970 and what type of costs are included in the Hacienda Construction v. Newman decision from 2010. The court opined:

“These costs refer to costs of litigation, including court costs. Further, the court may include litigation expenses necessary to bring the case to trial after the offer was rejected, which may include the offeror’s evidence, experts, and deposition fees… The function of Article 970 is to compensate the rejected offeror who was forced to incur greater trial litigation costs than he would have if the offeree had accepted his settlement offer. The article is punitive in nature and therefore must be strictly construed.” Hacienda Constr., Inc. v. Newman, 44 So. 3d 333, 337 (La.App. 5 Cir. 2010). [Internal citations omitted]

To add even another twist, if the Defendant prevails in the suit, La CCP 970 does not apply. There is no need if the Defendant wins the suit. If the Defendant wins and is awarded a judgment then the awarding court has discretion to award costs and fees under La CCP 120. See the Broussard v. Martin Operating P’ship, 103 So. 3d 713, 741 (La.App. 3 Cir. 2012), case for further explanation. The court there looked at FRCP 68 case law and did not stray from previous jurisprudence.

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Preliminary Notice and Mechanics Lien Compliance: How?

mechanics-lien-compliance

Getting paid in the construction industry is an art, especially for subcontractors and suppliers who must rely on payment to trickle down from the property owner, through the general contractor, and sometimes through even more parties.

Offsetting these complexities are state laws that provide subcontractors and suppliers with “mechanics lien” rights. These rights have existed in the United States since Thomas Jefferson introduced the first lien legislation more than 220 years ago. Today, the rights are as strong as they ever were.

One huge problem, however, is that companies must comply with the mechanics lien law’s notice and timetable requirements to preserve these mechanics lien rights. This is a minor headache if you do business in a single state, but as soon as you start expanding into other jurisdictions, balancing the paperwork load and differing laws in each jurisdiction becomes absolutely impossible.

What can you do?

1) Dedicate Your Company To Mechanics Lien Compliance

You may be tempted to avoid lien compliance simply because it’s so complicated. It’s easy to pretend that ‘it isn’t worth it’ or that ‘liens don’t work’ to avoid the daunting task of staying compliant with each state’s rules. The rules really do vary from state-to-state and circumstance-to-circumstance, and they are very complicated.

Nevertheless, savvy companies understand that the juice is worth the squeeze with mechanics lien compliance.

Adopting a Lien Policy and sticking to it could realistically drop your non-collectable debt percentage to near 0%; a key performance indicator (KPI) that could literally make your company millions of dollars.

Your company can be dedicated to mechanics lien compliance until their ears bleed, but without a way to actually comply, it won’t matter. For too long, companies have had to compromise their lien rights because compliance was impossible. As the next section explains, however, that’s no longer the case.

2) Use Technology To Manage The Mechanics Lien Laws

If you’re using Microsoft Excel or Outlook to manage your mechanics lien deadlines, you’re making a mistake. If you’re using a service provider and paying them per project to manually (yes, they are doing it manually) track and notify you of your mechanics lien deadlines, than you’re making a mistake.

It is a rare day when a company would rely on a manual process or a spreadsheet to track all of their invoices, expenses, or other accounting items; wouldn’t you agree?  Why in the world then would a company use these same error prone and laborious methods to track something so complicated as lien rights?

Historically, the answer to this was simply that there wasn’t any other choice. The times has changed, however, and there is a great technology available to help companies manage these lien and notice requirements.  Take, for instance, the zlien platform which completely automates the preliminary notice process and manages all mechanics lien and bond claim rights.

It is essential that your company rely on a technology to manage the lien compliance process, enabling the company to dedicate themselves to a lien policy, and resulting in a much better bottom line.

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