The Cobb Law Group is pleased to be nominated as one of the best construction law blogs in the country! This prestigious designation is sponsored by a group of construction professionals who review, rate and rank the construction blogs every year. In fact, this is the Georgia Construction Lien & Bond Law Blog’s four nomination in a row!
Previously, our blog was ranked third in the country; and, this year, we are shooting for first-place! Please help us out by clicking on the link below and voting for the Cobb Law Group:
“One reason why we appreciate this designation, is because it’s not just a popularity contest. Yes, readers’ votes help to keep the blog in front of the judges’ eyes, but the judges review each nominee for content and relevance to the construction professional” states Georgia construction attorney Mark Cobb, founder of the Cobb Law Group.
Today, we are pleased to present Vic Lance as our guest blogger for our Construction and Lien Law Blog. Vic Lance is the founder and president of Lance Surety Bond Associates. He is a surety bond expert who helps contractors get licensed and bonded. Vic graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan’s Ross School of Business. The ideas and opinions expressed here are the solely those of the author and do not necessarily reflect the ideas and opinions of the Cobb Law Group.
After a solid 2015, the prospects for the construction industry in the coming year couldn’t be more optimistic. Analysts predict a 6% overall growth and projected $712 billion value of the industry.
A variety of factors will drive change in construction. Besides workforce shortages, technological innovation, and shifting consumer preferences, construction industry trends will also be shaped by legislative changes throughout 2016.
New requirements will take effect to improve diverse aspects of construction. Standards on diversifying, tighter rules on contractor bond claims, anti-discrimination rules, and immigration regulations will be some of the influencing legislative factors this year.
While stricter legislation mean more effort on the side of construction contractors, this will help solidify the industry and improve it in the long run. Let’s take a look at the five major legislative trends for 2016.
#1. Focus on safety and industry problems
This year, the U.S. Department of Labor’s Occupational Safety and Health Administration is definitely putting a strong focus on fixing safety issues and misdeeds in construction. For the first time since 1990, OSHA increased its fines for violation of its rules by construction companies.
With construction accidents rising due to inadequate safety measures, a disproportionate number of foreign-born workers suffer injuries and even death. In many cases, such workers are not hired legally, and regular audits show that many construction companies continue this practice. Immigration and Customs Enforcement is likely to enforce more checkups and penalties this year to address the problem.
Other U.S. authorities are also increasing control over contractors in order to prevent safety violations, corruption and all kinds of misconduct in the industry. Some hope also that OSHA’s higher fines will be used for education and training of contractors, so that future accidents, fraud, and mishaps can be decreased.
#2. Beware of False Claim Act liability
Enforcement of False Claim Act actions has been a priority for the federal government since 2014. This trend will certainly continue in 2016, as fund recoveries under the Act had already reached $22.75 billion by the end of 2014. The Act targets cases of contractors working on public projects who break the rules, by overcharging on materials and labor, providing low quality materials and work, or falsifying accounts.
Besides the legislation on the federal level, numerous state agencies have enacted their own acts to counter fraud and misuse against state and local authorities. Florida, California, and New York are just a few of the states where parallel legislation has been created and enforced.
To successfully adapt to this legislative trend, construction contractors working on public projects must be well-informed about FCA liability and FCA actions. It’s also a wise step to get acquainted with penalties’ limitations statutes that appeal courts are applying today. Seeking legal help is highly advised, as professionals would be best suited to advise construction companies on potential liability areas.
#3. Construction bond claims still problematic
Surety bonds for the construction sector– such as performance and payment bonds – have been used for decades, but some issues around them remain misunderstood and cause serious trouble for contractors. While there is no new upcoming legislation in this field, the legislative problems caused by noncompliance in bond claim cases are worth the attention.
A common pitfall is that construction contractors are not aware of the statutes set in the bonds they post in relation to project bidding and execution. Common misunderstandings include when you need to file a subcontractor in default and, more generally, how to handle bond claims in the best possible manner. This trend is causing millions lost for construction companies and difficulties for project owners.
Contractors can counter these problems with detailed knowledge of their obligations under the bonds they obtain. It’s more common for construction professionals to be aware of the rules that govern payment bonds, but when it comes to performance bonds, issues persist. Getting to know the terms of your bonds can save you a lot of hassle later– and a lot of money.
#4. Contractors bound to diversify projects
Even though the Small Business Administration expanded its Mentor-Protégé Program in 2015 and has been running its 8(a) Business Development Program for a while, a recent SmartBrief poll shows that the majority of businesses think that contractors should diversify their projects.
Using the opportunities set forward by the SBA, as well as the plentiful public projects that contractors can bid on and the different supporting government programs have been of great help to contractors over the years. Yet, the road towards a truly stable construction industry goes through construction professionals exploring different niches and diverse projects.
Relying on state help and support programs can only take construction businesses so far. Expanding into new types of projects, incorporating continuing education and training and resourceful investments are the upcoming trend for contractors in 2016.
#5. Green building growing strong
As in recent years, green buildings are in higher demand. Legislative trends in the industry also support the gradual switch to sustainable construction, as well as climate change negotiations and national commitments towards eco-targets.
LEED construction practices are one of the many ways in which the U.S. construction industry is catching up with environmental concerns and regulations. The push towards greener buildings comes not only from the legislative level, but also from client’s preferences. Institutional and commercial buildings are the ones that are most often required to meet green standards, but the trend is also moving in residential construction.
All in all, savvy contractors have a lot to gain in 2016. From increased focus on safety standards and green buildings to stricter rules under the False Claims Act, the construction field is bound to get stronger and more stable in the year to come.
What are your top legislative trends in construction for this year? What do you think will drive change in the industry? We’d love to hear your opinion in the comments below.
By Stephanie Dodson Dougherty
Nonresident contractors and subcontractors who plan to perform work in Georgia must register their business with the Georgia Department of Revenue for tax purposes. This registration must be completed within six months before or after the start date for the Georgia work. Tax types for which nonresident contractors must register include Sales and Use, Prepaid Wireless 911 Charge, Payroll Withholding, International Fuel Tax, Alcohol Tax, Tobacco Tax, Motor Fuel Distributor, and Miscellaneous Withholding. New businesses registered in Georgia must file a tax return monthly for six months, after which the business may change their filing frequency.
Registration requires various forms depending on the type of work to be performed and the contract price to be paid. Basic required information for registration includes business type, legal name, contact information, an operational and monitored email address, FEIN, and other taxpayer information. Registration also requires the names and detailed information for company officers and responsible parties. Partnership and LLCs are required to register at least two officers. Each business registration costs a small processing fee.
NAICS codes are also required. The North American Industry Classification System (NAICS) is the standard used by federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. Careful attention should be paid when determining the proper NAICS codes for one’s business. The most recent catalogue of codes is the official 2012 U.S. NAICS Manual, which includes definitions for each industry, background information, tables showing changes between 2007 and 2012, and a comprehensive index. This Manual is available online at http://www.census.gov/cgi-bin/sssd/naics/naicsrch?chart=2012.
Business registration requires various Georgia Department of Revenue forms depending on the contract under which one plans to perform in Georgia. Nonresident contractors and subcontractors should be prepared to issue a Power of Attorney and bonds proportional to the contract price. For contracts over $250,000.00, optional supplemental bonds are available, under which a 2% retainage is required. Additional filing is required after project completion to release any retainage held.
Although some information about this registration process in available online, the Georgia Department of Revenue’s website and rules have not been updated to match the most recent statutory requirements. Additionally, each registration presents unique and often unforeseeable challenges. Therefore, it is advisable to consult an attorney whenever a business attempts to complete a new business registration in Georgia. If you have any questions about starting this process, please feel free to contact us.
by Mark A. Cobb
Tragedy faced many construction business during the Great Recession. It impacted every layer of business from project developer and large prime contractor to building material supply stores and day laborers. Virtually no one was left unscathed.
This year, thankfully, there has been a turn-around in the construction industry. There are new public projects, new industrial and commercial projects, and new home construction. In fact, we poll our clients constantly, and the signs of prolonged improvement to construction economics are evident. Nonetheless, we should not forget the lessons that were learned during those recent, lean years.
Smart businesses learned from the mistakes revealed during the recession, and they have improved their efficiencies, they have reduced waste, and they have recognized the need for customer appreciation. When our clients call us and ask us to help consult on their construction business, we start with areas which devastated many industry participants. Here are some of the common suggestions which we make:
1. Fix Your Customer Contracts! Many specialty trade contractors have never used an attorney to prepare their construction contracts; or, if they did, it was a long time ago. This is a big mistake. True, laws change and your contracts should reflect these changes, but, more importantly, many client’s contract give up their rights because they started with sloppy contracts. For example, it is easier (and less expensive) for you to collect attorneys fees when you go after the money you are owed if your contract adequately addresses attorney’s fees. Unless an experienced construction lawyer has worked with you on your contract, then you may forfeit these rights.
2. Negotiate/Review Your Contracts: When a subcontractor works for a prime contractor, it is typical that the GC provides the subcontractor with a contract to sign. Wait! Have a competent Georgia construction attorney review the contract and negotiate it on your behalf. If you blindly accept the contract because “you need work” or because you are “too busy”, then you are gambling that the contract will protect you in case of a contractor’s failure to pay. In addition, due to the limited, skilled workers in the field, a subcontractor may have an easier time negotiating its contract than expected.
3. Shore Up Your Credit Applications: Business is good right now, but it’s worth taking time to update your credit applications, personal guarantees, credit card authorization forms, etc. The steps you take now can save you money in the long-run (and increase your recovery!)
4. Due Diligence: It doesn’t matter whether you are a large national general contractor or a local specialty trade subcontractor, few parities use the opportunity to conduct meaningful due diligence on their business relationships. We saw this failure to conduct due diligence bankrupt businesses in the second and third years of the recession, yet, it was totally unnecessary.
5. Document! Document! Document! Although it has been (and will always be) a significant area of contention, change orders presented many hurdles for subcontractor payment issues during the recession. Prior to performing work on a change order, make sure that you have the WRITTEN CONSENT of the general contractor and the owner of the project. Yes, its frustrating, yes its
6. Document Problem Areas. Similarly, when any issue erupts on a project site, document it, and document well. For example, keep thorough, complete daily logs, take photo graphs, document the issues in writing. Also, of course, make certain that you meet any notice deadlines required in your contract.
7. Be Wary of Email. Email (texting too) is a blessing and a curse in the construction industry. Email consents can be useful, however, they tend to be vague and / or out of context. When it come to something important, write a letter–at least write a “letter-style” email which is more formal. Assuming your contract doesn’t contradict this, you can probably send your letter via email, but a letter forces most writers to more-fully develop the situation and place it in the correct context. This can save ambiguity, confusion or “he-said/she-said” situations down the road.
8. Watch Out for Georgia’s Lien Waivers. If you execute a partial or final lien waiver in Georgia, make sure that you get your money very quickly. If you don’t get the money you are owed and if you don’t take certain steps within 60 days of the date of the lien waiver, then you may forfeit your right to payment forever. Assuming that a lien release is submitted with each pay app, then letting any invoice be out longer than 30 or more days hurts subcontractors immeasurably. Keep an eye on your receivables and remember to file either an Affidavit of Nonpayment or a Claim of Lien within 60 days of the date of your lien waiver for an unpaid Application for Payment.
9. Send a Notice to Owner/Contractor! During the recession, we hated telling clients that they had forfeited their rights to file a materialmen’s lien in Georgia because they had failed to send a timely Notice to Contractor / Notice to Owner (other states refer to this document as a Notice of Furnishing or Notice of Commencement of Work). Under current Georgia law, those in privity of contract withe the owner (i.e., general contractors and 1st tier subcontractors) do not have to send the NTO; those who lack privity of contract with the Owner (i.e., sub-subcontractors and material suppliers) must send an NTO within the first 30 days in which they begin work on the project or begin supplying to the project. Although this may seem like a hassle, it’s an inexpensive step and can increase your recovery rate significantly.
10. Payment Bond Claims. Many credit managers and construction professional understand that (most) government projects are required to have a payment bond in place for the benefit of subcontractors and suppliers; however, many do not know that often there are payment bond on private projects as well. And, if they don’t know about the payment bonds and don’t make a timely claim against the payment bond, then they may be losing a potential source of recovery. Don’t forget to look for payment bonds covering private projects!
11. Design Professional Have Rights Too. Traditionally, architects and engineers do not experience the same level of payment problems as other construction industry professionals, and this is usually credited with the fact that they are often paid first. The recession changed this, and all service and design professional have rights which may include the right to file a claim of lien for the money they are owed. Don’t let ignorance of Georgia’s law or professional “pride” prevent you from getting your payments by timely filing a lien for design services.
12. Mechanics & Materialmen’s Liens/Payment Bond Claims. Since we’ve been in this business for over 20 years, it’s hard to understand why everyone doesn’t file a lien if they don’t received payment for their materials, labor, services or equipment which they provided to a project. It’s vital that you meet the deadlines and all the technical requirements for filing a lien. Don’t let missing a deadline stop you from getting paid. Also, don’t forget that you can file a lien for your retainage — don’t let the time lapse to take this vital step.
Now, is a great time to position your construction business for the future, and the steps which you take now can make a world of difference tomorrow.
The Cobb Law Group makes every effort to get its readers informed about changes in the law, but occasionally, we offer basic guides to improve the foundations of business. Thus, beginning with this blog entry, we embark on a multi-blog article on Georgia contracts and, specifically, Georgia contracting in Georgia.
Thus, the following is Georgia Contracts Skeleton Outline which we intend to use as a framework for building this on-going series of useful articles:
a. Common law (contracts for services and property sales) – all essential terms required
b. UCC (contracts for the sale of goods) – “gap fill” missing elements
b. Construction revocation
e. Offeror’s death
f. Reasonable time passes3. Irrevocable
b. UCC firm offer
c. Performance of unilateral offer
d. Detrimental reliance
a. Follow rules of offer
b. Mailbox rule – accepted when sent
2. By silence
a. Unilateral rewards or offers
b. Unilateral offer geographically close
c. Past history of silent acceptance
d. Offer requires and offeree intends
1. Common law – mirror image requirement
a. No mirror image requirement
b. Knock-out rule
c. Battle of the forms
d. New terms associated if:
• Both parties merchants
• No material change
• Offeror didn’t limit to original terms
• No objection in reasonable time
1. Under seal
2. Bargained for detriment or benefit
ii. Consideration substitute
1. Promissory estoppel
iii. If contract modified
1. Common law – pre-existing duty plus (1) change of performance, (2) third party agreement to pay, or (3) unforeseen difficulties
2. UCC – no consideration needed for good faith modification
1. Infancy (with exceptions)
2. Mentally ill
3. Intoxication (with exceptions)
1. Mutual (not enforceable in Georgia)
iv. Fraud – plus offer to restore
D. Statute of Frauds
i. Applies to:
1. Contracts for marriage
3. Contracts that cannot be performed in under one year
4. UCC contracts for over $500
5. Real property interest transfer
6. Promise by executor, administrator, guardian, or trustee to pay for damages from their estate (in Georgia)
7. Revive debt barred by Statute of Limitations (in Georgia)
8. Money lending (in Georgia)
1. Common law
a. Service contract – full performance or signed contract
b. Real estate contract
• Signed contract
• Partial performance plus two: (1) possession, (2) payment, (3) improvement made
a. Signed writing with quantity of goods
b. Performance (for delivered and accepted units)
iii. Modified contract – must be in writing if the new contract would qualify for Statute of Frauds
II. Contract Performed or Excused
A. Parole Evidence Rule
i. Complete integration of agreement in writing
ii. Applies to evidence from before writing
iii. Not applicable if prior evidence is to show:
1. Contract formation defense
2. Separate deal
3. Clarify ambiguous term
B. Warranties (UCC only)
i. Express (not opinion)
ii. Implied merchantability (if seller is merchant)
iii. Implied fitness for a particular purpose (in Georgia – only applies to immediate seller and buyer/buyer’s family/household guests)
i. Express – objective standard of satisfaction
1. Common law
a. IF substantial performance and no material breach
b. THEN recover cost of completion or diminution in market value
a. Perfect tender required for goods and delivery (except for installment contract)
b. Risk of loss: (1) determined by contract, (2) breaching party, (3) buyer if shipment contract, seller if destination contract, (4) merchant until buyer obtains goods, (5) buyer when goods tendered
D. Excuses to performance
i. Impracticability – requires statute or contract provision allowing in Georgia
ii. Impossibility – unless promisor’s proper prudence could have avoided in Georgia
iii. Death of required specific performer
iv. Frustration of purpose
v. Cancel contract if performance remains on both sides
vi. Accord and satisfaction
viii. Recission for fraud or nonperformance
1. Common law – writing and consideration
2. UCC – writing
x. Destruction of identified goods
III. Remedies for Breach
A. Anticipatory repudiation
B. Money damages
1. Put non-breaching party in economic position as if contract performed
a. Reasonable certainty
b. No unforeseen consequential damages
c. Mitigation efforts made
3. Special circumstances
a. Lost volume profits
b. Incomplete performance
c. Economic waist and diminution of market value
ii. Consequential – only if solely traced to breach or exact compensation in Georgia
v. Liquidated – if allowed for in contract, injury hard to estimate, damages intended (not penalty), reasonable pre-estimate of loss
vi. Punitive – willful, malicious, fraud, wantonness, oppression, or entire want of care that raises a presumption of conscious indifference
vii. Nominal – to cover the cost of action in Georgia
viii. Collateral source rule – admissible to show actual loss in Georgia
ix. Litigation expenses – if (1) bad faith in underlying behavior, (2) stubbornly litigious, or (3) caused unnecessary trouble and expense
C. Equitable Relief
i. Specific performance – for real estate (in Georgia must show tendered money) or unique goods
iii. Seller’s right of reclamation – UCC
1. Buyer insolvent at purchase
2. Demanded within 10 days receipt, AND
3. Buyer still has goods
iv. Buyer’s replevin for identified goods – UCC
1. Seller insolvent within 10 days, or
2. Seller failed delivery of family goods, or
3. Specifically identified goods that buyer can’t cover
IV. Third Parties
i. Intended vs. incidental
ii. Promissory estoppel – third party aware and reasonably relied
iii. Vests if
1. Reasonable detrimental reliance
2. Manifestation of assent
3. Suit filed
i. Transfer of rights
ii. In Georgia – once a party performs, that party may assign rights without consent of the other party and even if the contract says no assignment allowed (except for personal services or special skills contracts)
iii. Multiple assignments
1. If no consideration, last assignment has priority
2. If consideration given, first with consideration has priority
i. If contract allows and no special/individual performance interest
ii. Delegating party still liable under the contract
As our long-time readers know, Mark Cobb serves as adjunct faculty at Thomas University where he has taught Leadership, Management,Economics and most recently Construction Law to upper level students and MBA candidates. He enjoys teaching, working with students, and staying current on legal trends. This fall semester, Mark will be teaching Business Law in the MBA program at TU.
As a Georgia construction lawyer, Mark spends the majority of everyday working in the area of business law. “Construction law,” says Mark, “is business law on steroids! Basically, the contracts are bigger, the number of parties is significantly larger, and the problems very complex. Thus, teaching business law is a natural fit for me.”
Although the semester is only 16 weeks long, the list of topics which Mark intends to cover will challenge his students. As students working toward their MBA, the classroom should be filled with bright, alert students who want to learn. After a quick overview of the American legal system and its court structure, Mark will dive right into the subject of Contract Law. To no ones surprise, this is likely to be one of the most-emphasized sections of the class as they tackle such topics as the following:
- the nature of contracts
- sources of law governing contracts
- noncontract obligations
- bilateral and unilateral contracts
- requirement for a valid offer for a contract
- requirement for a valid acceptance of a contract
- what constitutes consideration
- misrepresentation and fraud
- rescission of contracts
- illegal contracts
- the Statute of Frauds impact on contracts
- parol evidence rule
- third-party beneficiaries under contracts
- performance and breach of contracts
- remedies for contract default
For over 20 years, the world of construction contracting has given Mark a legal and practical application for each of these specialized topics; in addition, and equally important to construction claims, Mark will discuss the concept of personal and real property including construction liens such as subcontractors lien, materialmen’s liens as well as such topics as the following:
- the nature of property
- acquiring ownership of property
- rights and interests in real property
- transfer of property
- landlord and tenant issues (commercial)
- insurance law
- secured transactions
- suretyship and guaranty
- liens on personal property
- security interest in real property
- mechanics and materialmen’s liens
- defaults and foreclosures
- enforcement of lien rights
- commercial papers
- negotiable instruments
- holders in dues course
- good faith in business
- general liability of parties
- agency law
Knowing how and when to structure a business is very important. Some of the MBA students may become entrepreneurs, consultants to industry, or attorneys; thus, Mark’s course will conclude with an in depth look into the law of various business structures including the following:
- creation of partnerships
- operation of partnerships
- dissolution of partnerships
- limited liability companies
- limited partnerships
- limited liability limited partnerships
- the history and nature of corporations
- the organization and financial structures of corporation
- nonprofit corporations
- management of corporations
- shareholder rights and liabilities
- securities regulation
- legal and professional responsibilities of auditors, consultants ands securities professionals
- the Sherman Antitrust Act
- the Clayton Act
- the Robinson-Patman Act
- employment law
- environmental regulation
Utilizing the Socratic method, Mark’s goal is to share with his students an understanding of the practical application of current business law as well as the theories relevant to the changing legal landscape. He plans to draw upon his over 20 years of Georgia construction law experience and resources. “For virtually every topic presented in the textbook, I have seen a real world application which enables me to enlighten the materials with first-hand knowledge. Since our firm helps property owners, general contractors, specialty trade subcontractors and material suppliers, we’ve seen most of the scenarios from multiple perspective which give us an insight other business professionals might not have. We will be able to discuss how to deal with breaches of contract from virtually every perspective.”
The Cobb Law Group is pleased to announce that construction attorneys Mark Cobb and Christopher Thurman will be presenting at an upcoming seminar on Georgia construction law. The course is organized by The Seminar Group and is called Construction Law in Georgia. It will be held on October 1, 2015 in Atlanta, Georgia.
This programs is designed for construction professions who want to mitigate risks on their projects. As the seminar brochure describes,
At this seminar, experienced construction attorneys will teach you how to comply with Georgia’s complex lien laws, how to collect on a judgment, and how to mitigate the harmful risks of bankruptcy. Our experts will also discuss the pitfalls of public construction contracts including government compliance programs and the significant risk of false claims, as well as recent insurance concerns impacting the construction industry.
Anatomy of the Georgia Claim of Lien: Using his decades of experience of filing and enforcing mechanics and materialmen’s liens throughout Georgia, Mark Cobb will begin the first session by presenting Anatomy of a “Claim of Lien” based upon his Georgia Material Supplier Collection Handbook. During this live presentation, Mark will offer practical guidance and useful tips that you can take back to your office and immediately implement. Specifically, he will focus on the following topics which are essential for every lien claimant to know and understand:
- Georgia’s Notice of Commencement–What it is and Common Mistakes During Preparation
- When to Send a Notice to Contractor and Notice to Owner (also sometimes called Notice of Furnishing)
- Essential Elements to Include in a Claim of Lien in Georgia
- Common Mistakes Made When Preparing and Filing Liens
- Advantages of Filing a Lien
- What amounts are lienable
- Lien Enforcement Through the Judicial Process (i.e., foreclosure of liens in Georgia)
- How to Perfect a Lien in Georgia
- What Happens to a Lien After it is Perfected
Project Insurance Needs: Every construction project–whether large or small–has insurance issues, and attorney Christopher Thurman will close the session with his presentation on “Recent Concerns for Everyday Insurance Matters”. He will offer tips and current legal trends regarding the various types of insurance available and how to make certain that you are covered when you need to be. His presentation will include the following topics:
- Sufficient Minimum Coverage
- Certificates of Insurance and Copies of Endorsements
- Additional Insureds
In addition to Mark and Christopher’s presentations, other experienced construction lawyers will present on such important topics as The Nuts and Bolts of Collections, Bankruptcy in the Construction Industry, Immigration Issues, What Contractors Need to Know About Labor & Employment Laws and How to Deal with FLSA Claims, and Public Construction Contract Law Update.
Collecting on a Judgment: Have you ever received a judgment against another party and wanted to collect against that judgment? If so, then the following topics will be covered in this engaging seminar: When and Where to Record a Judgment Obtained Against an Owner, Contractor, Subcontractor, or Supplier; How to Domesticate a “Foreign Judgment” in Georgia; How to Transfer a Georgia Judgment to Another State for Collection; the Most Effective Ways to Collect on a Judgment (including going against bank accounts, the debtor’s other projects, and wage garnishments); How to Discover Assets by Serving Post-Judgment Written Discovery such as Interrogatories and Requests for the Production of Documents, Taking Debtors’ Post Judgment Depositions; Tips for Asset Searches; as well as “Front-End” Planning Tips to Help Ensure a Successful Collections Process.
Bankruptcy & Construction Law: During the Great Recession, bankruptcy impacted many construction projects, and the seminar covers topics such as: How Does a Debtor’s Bankruptcy Filing Impact my Claim for Payment? What Happens to My Judgment if Bankruptcy is Filed? Can I Pursue Payment in Bankruptcy Court? Strategies and Tactics for Collecting “Around” the Bankruptcy Court; How to Deal with Lying, Cheating or Stealing in Bankruptcy (including fraudulent transfers of assets)?
Immigration & Construction Issues: Georgia’s construction industry is fraught with immigration minefields, and this topic will help educate and answer employers’ questions including the following: Does E-Verify Apply to the Construction Industry? Are There Legal Ways to Employ Undocumented Workers on a Construction Project? What are the Penalties for Using Undocumented Workers? Can Construction Workers in Georgia Obtain Work Visas? What if a Construction Worker has Children Born in the U.S. – Does That Impact His or Her Status?
Employment Law & Construction: Keeping a job site safe and secure requires a great deal of knowledge and work. At the seminar, business owners will learn about such vital issues as: Maintaining a Diverse Workforce Free from Harassment, Discrimination, and Retaliation; Accommodating Employees with Disabilities; Dealing with Family, Medical, and Military Leave Issues; Understanding the National Labor Relations Board’s Broad View of “Protected Concerted Activity;” and Applying the Fair Labor Standards Act to the Construction Industry.
Current Law: New laws are always being passed by the legislatures and administrative agencies, and older laws are being interpreted by courts and tribunals. Thus, the presentation current issues in construction law will cover such topics as New Federal Regulations Impacting the Construction Industry, Recent Georgia Legislation; The Who/What/When of Bid Protests; False Claims; Regulatory Compliance Programs; as well as a thorough Case Law Update on interpretations and changes to existing laws.
Continuing Education Accreditation: This course has been approved by the Commission on Continuing Lawyer Competency of the State Bar of Georgia for mandatory continuing legal education credit in the amount of 6.1 regular hours. This course has been approved by The American Institute of Architects for 6.25 LU’s. The Seminar Group is an AIA CES Approved Provider. This course has been approved by the IRMI for 7.0 hours of CRIS reaccreditation credits. Contractors and engineers may qualify for continuing education hours through the American Institute of Constructors or the Construction Management Association of America.
For more information about this incredible seminar on Georgia’s Construction Law, Mechanics Liens, Materialmen’s Liens, and related issues, please click here > >
Education is one of the most important aspects in our communities, and our Georgia technical colleges are provide many students with the foundation for their careers. Thus, we were excited today to witness the unveiling of the sign and the formal celebration for the new Southern Regional Technical College! Southern Regional is the name of the merged institutions formerly known as Southwest Georgia Technical College and Moultrie Technical College.
Cobb Law Group founder, Mark Cobb, serves as Treasurer of the Southern Regional Technical College Foundation Board of Directors; as such, Mark was delighted to participate in today’s festivities which included many visiting dignitaries, the sign unveiling, and a ribbon-cutting ceremony for new laboratories and classrooms.
Special guests included the Commissioner of the Technical College System of Georgia, Gretchen Corbin, Board Member, Judge Richard Porter, Representative Amy Carter, and Representative Darlene Taylor. The Foundation helps to provide money for the institution including grant writing and direct fundraising for the college. The money is used to directly impact and improve students’ education. Southern Regional regularly help students in many areas of industry including the construction industry.
The Cobb Law Group is grateful to join with others in celebrating the creation of Southern Regional Technical College!
In today’s blog, the Cobb Law Group is answering a recent question from a client regarding a general contractor’s right and remedies under the Georgia’s Mechanics and Materialmen’s Act.
Question: I’m a general contractor in Georgia, and a subcontractor has placed a mechanic’s lien against our project, what are my rights and how can I get the lien removed?
Answer: While it is true that Georgia’s lien statutes make it relatively easy for subcontractors and suppliers to file liens against construction projects for non-payment, the lien laws also grant rights to owners and general contractors. In fact, many of the same remedies exist for owners and general contractors.
Before sharing some of the most-useful tools for removing a lien, however, it is important to consider a few questions:
1. Do you have any lien waivers from the lien claimant? (If not, why not!)
2. Did the lien claimant substantially perform his or her work on the project?
3. Have you been paid by the owner for the work performed or materials supplied by the lien claimant?
4. What does your contract with the lien claimant say?
5. How soon do you need to have the lien removed?
After some preliminary information is gathered, you will be better able to decide which option is your best option for getting the lien removed. Although the list is not exhaustive, the following are some of the options (in no particular order) which Georgia general contractors have to remove the liens against their projects:
Bond to Discharge Lien: Unequivocally, the fastest way to remove a materialmen’s lien is to post a bond to discharge the lien. There are two common methods to post a bond to discharge a lien: (i) to pay a surety to post the bond on your behalf, or (ii) post a cash bond with the clerk of court (which needs to be double the face amount of the lien unless the property is your residence). This method will instantly remove the lien (and the cloud against the project’s title); however, it will not remove the underlying issues with the lien claimant. In its most simple terms, the bond is a substitute for the real estate–the real estate is replaced by the bond as collateral for payment. Thus, the lien claimant still has a right to pursue the surety for payment instead of the real estate where the project was built. General contractors frequently post these types of bonds to “smooth” everything with the project owner as it quickly removes the lien, but they must, subsequently, address the subcontractor’s claims.
Do Nothing: Georgia’s materialmen’s liens automatically expire 395 days from the date they are filed unless the lien claimant takes specific steps to enforce its lien rights. Due to many reasons, lien claimants do not always pursue their rights; thus, it is possible for the lien to expire on its own without the general contractor (or project owner) taking any proactive steps. For more information on how lien claimants enforce their lien rights, please click here > >
Notice of Contest of Lien: This option is similar to the preceding option. When a general contractor files a Notice of Contest of Lien, it reduces the period of time in which a claim of lien can be enforced from one-year from the date of the lien’s filing to 60 days from the date of the filing of the Notice of Contest of Lien. If a contest is filed–and the lien claimant does not undertake the steps necessary to perfect its lien–then the lien automatically expires 90 days from the date of the filing of the Notice of Contest of Lien.
Technical Deficiencies: Georgia’s Mechanics and Materialman Lien Act is very specific, and lien claimants who do not meet the strict adherence required by the Act have unenforceable liens. Believe it or not, this is a common tactic for getting liens removed as many lien claimants file their lien too late, the liens do not include statutorily required language, etc.
Contract Remedies: A well drafted contract between you and the lien claimant should include the rights and remedies related to non-payment. Typically contract provisions require immediate arbitration or mediation of the claim which can result in a prompt resolution of the claim.
Payment: Like castor oil, this can be a difficult remedy for general contractors to swallow. Nonetheless, it is a viable option which must be considered. General contractors are advised to consider the cost-benefit of paying the lien claimant (even if the claim is disputed) as legal fees may not be proportionate with the pay-out, or the reputation of the general contractor may be impacted.
Lien Waivers: Georgia’s lien laws only recognize two lien waivers–one for interim payments and the other for the final payment. If you have fully executed lien waivers, then they may substantially alter (or alleviate!) the lien claimant’s ability to file a lien. A valid Georgia lien waiver becomes an unconditional waiver after 60 days; thus, this 60 day deadline can limit the amount the lien claimant can claim or cause the lien claimant to forfeit his claim entirely. To learn more about Georgia’s required lien waiver form, please click here > >
Lawsuit: In addition, the general contractor likely has a cause of action against the lien claimant, and it may be possible to ask the court for declaratory relief to release the lien as well as ask the court for damages suffered as a result of the filing of the lien.
Every situation is different, thus, it is good that Georgia does not require a “one-size-fits-all” response to filing a materialmen’s lien. Each of the prime contractor’s options should be carefully weighed against the legal costs, the obligations owed to the owner, the contractor’s reputation and with sound legal advice. If you have any questions regarding how to remove a lien which has been filed against your property, please do not hesitate to contact us.
by Mark A. Cobb
Since 1992, our construction law firm has been working with contractors, subcontractors and materialmen to help get them paid by using the advantages established under Georgia’s Mechanics and Materialman’s Lien Law Statutes. From time-to-time, we like to remind our readers of some of the advantages of this law, and offer practical tips to helping them get paid.
What are the different types of liens available to someone who has not received payment on a construction project in Georgia?
Generally speaking, there are many different names for the type of lien this blog article is discussing. Georgians usually refer to the liens filed by contractors and suppliers for nonpayment as “mechanics liens” or “materialman’s Liens”; in addition, some people (or other states) may refer to them as “construction liens”, “contractor liens”, “subcontractor liens”, “supplier liens”, “claim of lien” or something else. Regardless of what you call it, use Georgia’s lien laws to help get paid!
How do liens help me get paid?
It’s important to remember that when a problem occurs, there are different areas of law which may provide relief (like different tools in a tool box). Contract law, for example, governs every contract, and if you provide the labor, materials or services required under a contract, but you do not receive payment, then Georgia’s contract law spells out the rights the parties have. Thus, in a typical non-payment situation, contract law applies and the breaching party will likely have to pay the non-breaching party the amount due. In other words, the entity with whom you contracted owes you the money for your services. In construction scenarios, however, Georgia’s lien laws may offer you remedies (that is, other tools) against other people or entitles.
When you place a lien against someone’s property, you are asking the real estate to serve as collateral for the debt owed to you. And, this makes sense when you consider that the real estate (or the owner of the real estate) is the true beneficiary of your work or materials. For example, consider the following: an owner contracts with ABC General Contracting to build a building; ABC General Contracting, in turn subcontractors with XYZ Subcontractors for a portion of the work. If ABC fails to pay XYZ, then, under contract law, XYZ Subcontractor can seek payment from ABC General Contracting. If XYZ also files a mechanic’s lien against the project, then XYZ Subcontractor may be able to also seek payment from the Owner because XYZ’s work improved the value of the Owner’s property. In fact, without XYZ’s work or materials, the Owner’s property would, arguably, have a lower value. Thus, filing a Materialman’s lien can be similar to getting a retroactive personal guaranty!
Who can claim a lien under Georgia’s lien laws?
Georgia is fairly generous in allowing people (or companies) who haven’t received payment for their materials, labors or services to file a Claim of Lien against the project on which they worked or provided building materials. Thus, the “typical” general contractor, subcontractor, sub-subcontractor, material supplier typically have some type of lien rights; in addition, the Georgia Code allows others lien rights including foresters, land surveyors, and architects. For a more detailed listing of those entitled to file a lien in Georgia, please click here > >
What is the deadline for filing a lien in Georgia?
Unless the potential lien claimant has signed a valid Georgia lien waiver, then the lien must be filed within 90 days of the last day in which the lien claimant actually worked on the real estate. Be careful, as valid lien waivers can shorten this period to either (i) 90 days from the last day worked or (ii) 60 days from the date of the lien waiver whichever is shorter! If you want an easy way to calculate these deadlines, then please request our Georgia materialmen’s deadline calculator > >
How long do liens last in Georgia?
Unless a Notice of Contest of Lien is filed (usually by the owner of the project or the general contractor), Georgia’s liens expire one year from the date of filing. In order to prevent this automatic expiration of the claim of lien, the lien claimant must “perfect” prior to the lien’s expiration. There are several methods to perfecting a lien in Georgia, but the most common method is through filing a lawsuit to collect the money which you are owed.
Does filing a lien against someone’s property guarantee payment?
Although Georgia’s Mechanics and Materialmen’s Lien Act is a very useful tool for improving the odds that you will be paid, there are no guarantees; thus, we typically recommend using the full arsenal of collection tools at your disposal.
If filing liens for nonpayment is a collection tool, are there other tools which my company should consider using to prevent payment problems?
Absolutely! There is a wide array of tools for construction professionals to improve their collection rate. Needless to say, the starting point, for you is likely either strong credit practices and a good, written contract. In addition, many contractors and subcontractors fail to exercise due diligence to see their credit risks. In addition, other common tools for the construction industry include preliminary liens, notices of furnishing, payment bond claims, lien claims, affidavits of nonpayment, and claims against retainage amounts. For more information on some of these useful collection tools, please download our helpful manual for filing liens in Georgia by clicking here > >
Do you have another question for our lien and payment bond attorneys, if so, please contact us today to enforce your lien rights and increase your ability to get paid.