Missed Your Lien Deadline – What Now?

On May 3, 2013 by

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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On May 03, 2013

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