The Louisiana Public Works Act (the “Act”) was enacted for the sole purpose of protecting people doing work, performing labor, or providing materials for the construction, alteration, or repair of public works. To accomplish this objective, the Act mandates that public entities require the contractor to secure the public project with a bond to assure that those who perform public projects receive payment for their work in the event of a contractor’s inability to fulfill its payment obligations. In the event that a contractor does in fact fail to fulfill its payment obligations to a subcontractor, the subcontractor can file a lien against the bond for payment.
If you are subcontractor on a public works project and you have not been paid in accordance with your contract, here are the basics of what you need to know to file a lien:
WHO: The Act limits recovery on the bond to “claimants,” which includes any person to whom money is due pursuant to a contract with the owner or general contractor or subcontractor, for doing work, performing labor, or furnishing material for the construction of any public works.
WHAT: The Act states that you must file a “Sworn Statement of Amount Due” (aka a lien). While the Act itself does not have specific requirements for the content of a lien, liens usually include information about the project, the contractor, the bond, the subcontract work, and the amount owed to the subcontractor by the contractor.
Additional Note: It is important that the amount owed to you included in the lien is as exact as possible (i.e. provable through documentation) for the purposes of recovering attorney’s fees. The Act states that if payment is not made within 30 days of demand, a claimant who recovers the full amount of a timely recorded lien shall be awarded 10% of the amount recovered for attorney’s fees. If you recover less than the full amount of your lien, you are not entitled to recover attorney’s fees under the Act.
WHERE: You will need to file and record your lien in the office of the recorder of mortgages for the parish in which the work was done. For example, if the project was located in Orleans Parish, you will need to file and record your lien in the Office of the Recorder of Mortgages for the Parish of Orleans.
WHEN: The Act requires subcontractors to file and record the lien after (1) the maturity of the claim and (2) within 45 days after the acceptance of the work by the governing authority or of notice of default of the contractor or subcontractor.
WHY: Filing a lien against the bond is important to help ensure payment. Without the lien against the bond, the only avenue you have to recover the money owed to you is through a lawsuit against the party who owes you payment. Even if you were able to win a favorable judgment, you may not be able to collect the judgment against the liable parties if they are insolvent. The purpose of the bond, and the importance of filing a lien against the bond, is to avoid the problem of insolvency.