We get telephone calls and emails all the time asking about filing mechanics and materialmen’s liens in Georgia. Most people understand that the rules must be followed exactly, but they don’t know the rules. In addition, the rules regarding the filing of the liens changed substantially in 2009 thereby forcing everyone to learn new rules. In this blog entry, we are going to give you some basic guidelines for filing liens in Georgia. Please keep in mind, that we are sharing generalizations about the lien laws, and you really need to contact a lawyer knowledgeable in liens in order to advise you as to the specific facts of your matter.
Step One: Do I Need to File a Notice to Owner/Notice to Contractor? If you contract directly with the owner of the construction project or with the general contractor, then a Notice to Owner/Notice to Contractor (“NTO”) is not required. If, however, you have contracted with someone else (e.g., a sub-contractor), then an NTO is required to be sent within 30 days of the first day in which you are on the job. Failure to send this NTO may prevent you from filing a construction lien if you are not paid for your work or supplies.
Step Two: When Do I Need to File a Mechanic’s or Materialmen’s Lien? If you have worked or supplied on a construction project, but you have not been been paid, then you may file a materialmen’s lien against the real estate where the project is located. This must be filed within 90 days of the last day in which you literally worked on the project (you cannot use the date of the invoice).
Step Three: Where Do I Get the Forms to File a Mechanic’s or Materialment Lien? As mentioned above, the lien laws changed in 2009, therefore, the former forms are no longer valid. The Georgia Legislature and the Georgia Courts have repeated confirmed that mechanic and materialmen lien laws must be “strictly construed”; that is, a lien must comply with each and every requirement otherwise, it will be deemed invalid. Although there may be some “free” forms floating around the internet, we encourage you to consult with a Georgia attorney who knows about liens and the lien laws. Otherwise, your lien might not be valid. Common mistakes which we have seen include (i) failure to properly identify the real estate which is subject to the lien, (ii) failure to give statutory notice to the owner of the real estate, (iii) using the wrong lien form, and (iv) adding amounts to the lien which may not be included. An investment in preparing and filing a proper lien may make the difference in whether or not you see any recovery.
Step Four: After Filing the Lien, What Do I Have to Do? Mechanics’ Liens and Materialmen’s Liens are valid for one year from the date the lien was filed. In order to extend the life of the lien, you must do at least two things: (i) you must file a lawsuit against the person with whom you contracted, and (ii) withing 30 days of filing this lawsuit, you must file a Notice of Filing of Action in the real estate records where the lien is filed. Then, if your lawsuit against the party with whom you contracted is resolved in your favor, then you can take steps to foreclore upon your lien.
As we have stated, there are many little details and exceptions to filing liens and perfecting liens in the State of Georgia. If you wish for us to review the facts of your specifice case, please contact us. And please let us know if this blog entry is useful to you and whether or not you would like to see more entries like this!
Most southeastern states require suppliers and subcontractors to give some sort of Notice of Furnishing or Notice to Owner (“NTO”); however, each state has its own special requirements and relying on one state’s requirements to get through another state’s requirements will land you in hot water. We get a number a telephone calls each week from suppliers and materialmen from nearby states who are providing construction materials on Georgia projects, and they ask us about Georgia’s NTO requirements. Today, we thought you might appreciate a brief overview of Georgia’s NTO requirements.
What is a Notice to Owner (“NTO”)? An NTO is a required notice which lists who is supplying materials or who has been subcontracted on a construction project in Georgia. The NTO must contain certain information as mandated by the Georgia legislature, and it must be sent to the owner of the construction project as well as the project’s general contractor (this second letter is sometimes referred to as a Notice to General Contractor).
Why are Notices to Owner Required? Generally speaking, project owners are responsible for making sure that the money they pay on construction projects filter down to all the contractors, sub-contractors and materialmen who worked on the project. During Atlanta’s construction boom in the 1990’s, construction projects where getting larger and larger, and it was difficult for project owners to track their payments down the line. Of course, project owners knew whom they had hired as the general contractor, and the general contractor (acting as the project owner’s agent) knew the subcontractors they had hired. However, identifying the sub-subcontractors and material suppliers was a daunting tasks. Thus, the Georgia Legislature instituted the NTO construction notice procedure.
Who Must Give a Notice to Owner? Third-tier (and lower) subcontractors and materialmen are required to give NTO’s. Contractors in a direct contractual relationship with either the project owner or the general contractor do not need to send an NTO; this is referred to as “privity of contract”. Even though they are not required under Georgia’s statutory notice scheme to send an NTO, we have several clients who work directly for the owner or the GC who send NTO’s in order to “emphasize” that they are on the job and expect prompt payment.
Are There Exceptions to Sending an Notice to Owner (“NTO”)? Yes, third-tier contractors and suppliers are required to send an NTO only if the project owner or the general contractor filed a Notice of Commencement in the real estate records in the county where the project is located. If such a Notice of Commencement is not filed, then an NTO is not required to be sent. Similarly, if the Notice of Commencement is invalid or improper, than the sub-subcontractor or supplier’s obligation to send an NTO may be excused.
If a Notice to Owner (“NTO”) is Not Sent, Can a Materialmen’s Lien be Filed? It depends on the specific circumstances. It can depend on such things as the type of contract used between the parties, the nature of the Notice of Commencement, the work dates, etc., and we encourage you to contact your lawyer or us for an analysis of your unique circumstances.
What Information Must be Included in a Georgia Notice to Owner or Notice to Contractor? Georgia’s statutory construction notice scheme must be strictly followed; in order to send a proper notice, an NTO must include the following information:
- The name, address and telephone number of the entity/person providing labor, services, or materials;
- The name and address of each person at whose instance the labor, services, and materials are being furnished;
- The name and location of the project as set forth in the Notice of Commencement; and
- A description of the labor, services or materials being provided and, if known, the contract price or anticipated value of the labor, services or mateials to be provided or the amount claimed to be due, if any.
Notices to Owners, Notices to Contractors, Notices of Furnishing and Notices of Commencements can be very confusing to those new to the industry or those from another state which has similar–but different–requirements. Therefore, we have put this blog post together for informational purposes only and encourage those with questions to seek competent legal advice (contact us!). We also ask our fellow practitioners (particularly those in other states) to comment on or link to information related to Notices to Owners in their own states. Thank you!