A complex feature of Louisiana’s mechanics lien law has been changed in the state’s most recent legislative session, setting forth a mechanics lien foreclosure deadline that is easier to calculate. The law takes effect on August 1, 2013, and can be read in its full text here: Louisiana 2012 Act 394.
Under existing law, mechanics lien claims filed in Louisiana (called “Statements of Claim and Privilege”) expired if they were not foreclosed upon within 1 year from the date the lien claim was originally due. To figure out the expiration period litigants are required to calculate when the lien was due (which is tricky) and then count one year from that date.
The law that takes effect on August 1, 2013 will make things simpler by requiring lien foreclosure actions within 1 year from the date the mechanics lien is filed – a very concrete date.
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Overall, this change in the law is good.
The mechanics lien deadline in Louisiana is surrounded by gray matter in most instances because it may require a determination of when substantial completion occurred on the project. By extension, the existing law meant that foreclosure deadlines were just as confusing. This law change leaves the mechanics lien deadline in a haze but makes the foreclosure deadline concrete.
Property owners, developers and some prime contractors are also likely pleased with the change because it reduces the life of most Louisiana mechanics lien claims.
Since Louisiana is one of those states whose mechanics lien deadline calculates from the completion of a project (versus the claimant’s work), many mechanics lien claims are filed weeks, months or even a year or so before the project is completed. Existing law allows these lien claims to remain valid undisturbed until 1 year after the project’s full completion.
The new law will reduce the effectiveness to just one year from the lien’s filing, with obvious implications for the life expectancy of a Louisiana mechanics lien.
Opposite of property owners, developers and prime contractors, suppliers and subcontractors may be weary of the change. While it makes the deadline calculation easier, it also means that they may be facing a decision on whether to foreclose the lien before the end of construction project. If things like retainage are still owed, but not yet due, this could make for a difficult decision.