Purchasing or selling a property, structure or other commercial property is a process. Depending on the property, a commercial property could come with a slew of responsibilities or aspects to consider whether you are buying or selling. If you are buying, you naturally want to be especially cautious that the property you are buying is sound and ready to be taken ownership of. One thing that could stand in the way of this is a labor lien, if one exists on the property or structure.
A labor lien, sometimes known as a construction lien, functions and exists in a way to protect subcontractors. In places where they are recognized, like in Louisiana, parties that are contracted to build or repair property may obtain the right to seize the property they built or repaired if the owner fails to pay them. While you may not have been that owner who failed to pay the subcontractor — it would in fact have been a previous owner — you could be the owner left holding that responsibility.
To ensure that doesn’t happen, buyer and seller need to abide by any labor lien in accordance with Louisiana state law. This law aims at protecting these laborers whose services were not paid for in accordance with their work. Subcontractors, laborers, employees, suppliers, and lessors may file claims against both the owner and the general contractor. All claims of suppliers and subcontractors rank equally and ahead of the privilege of contractor and surveyors, architects and engineers, which also rank equally. This means that all of these parties could have an interest in a property if debts to improve that property go unpaid by the previous or current owner.
Any labor lien on a property should be disclosed by the seller. However, it wouldn’t be the first time that a seller may try to slip something sight unseen into a property agreement. Finding out everything about a property is in one’s best interest and should be considered before making a deal. Existing labor liens could change the entire outlook on the purchase or sale of property.
Source: FindLaw, “Contractors’ Liens: Select State Laws,” accessed on Sept. 11, 2017