I signed a Lien Waiver, but I haven’t gotten Paid What Can I Do?
We are getting more and more questions about lien waivers every day so that tells me something is rotten in the State of Denmark, but I’ll leave that discussion for another time. Here, in a nutshell, is an basic overview of Georgia’s Lien Waiver laws:
There are two basic types of Lien Waivers which effect suppliers, subcontractors and general contractors on Georgia construction projects: GEORGIA INTERIM WAIVER AND RELEASE UPON PAYMENT and GEORGIA WAIVER AND RELEASE UPON FINAL PAYMENT. Interim Lien Waivers are requested from suppliers and subcontractors at the time a draw is made; and Final Waivers are requested from suppliers and subcontractors at the time the last payment is made on a Georgia construction project.
When a materialman or subcontractor signs a Lien Waiver, it is stating that it has been paid all the money it is due through the date on the Lien Waiver, and, that materialman or subcontractor will not file a materialmen’s lien for those amounts. Basically, the owner or the prime contractor is saying, “Here’s your money.” and the supplier or subcontractor is saying, “I have received all my money through a certain point in the project, thus, I will not later claim that I haven’t been paid for this money.” A Lien Waiver is similar to a receipt.
The above-described exchange works great when everybody is gathered around a big table and checks are being handed out and Lien Waivers are being signed, and everyone is merry. Practically speaking, however, this merriment seldom occurs. Instead, owners or general contractors request that Lien Waivers be signed before a draw is made. This is fine when the project owner or the prime contractor forwards payment to the supplier or the subcontractor quickly. However, we are seeing that our clients are requested to sign Lien Waivers, but the money isn’t being paid. Is there anything a subcontractor or supplier can do?
Yes, watch your calendar!
If a Lien Waiver has been signed but payment has not been received, then you have 60 days from the date of the Lien Waiver in which to file a Georgia Affidavit of Nonpayment. The Affidavit of Nonpayment must meet all the requirements of the Georgia code, it must be signed and filed in the county real estate records where the project is located. Also, copies of the Affidavit of Nonpayment must be served upon the owner of the real estate project. This must be completed within 60 days of the date of the Lien Waiver otherwise the supplier or subcontractor may be prevented from pursuing any type of collection activities for the money they are owed. While some suppliers and subcontractors may be able to prepare and file their own Affidavits of Nonpayment, there are many details which must be completed, thus, we encourage you to contact us or any construction law firm for assistance with this important step.
PRACTICAL TIP: We encourage all our clients to mark their calendar for 45 to 50 days from the date that any Lien Waiver is signed; if you have not received payment by that date, contact us!
It is also very important to note that filing an Affidavit of Nonpayment DOES NOT EXTEND the amount of time in which a mechanics or materialmen’s lien may be filed. These construction liens still must be filed within 90 days of the last day in which you worked on the project.
The success of filing valid materialmen’s liens never cease to amaze me.
Although there are no guarantees, it has been proven many times that filing a valid mechanic’s lien will increase your recovery of bad debt. About three weeks ago, for example, a new client contacted us and stated that they had performed work in the common areas of a large development near Atlanta, GA. We confirmed that they had performed pursuant to their contract, that there were no defects, and double checked their invoices and demands. We confirmed the project location and confirm that our client had performed work on the site in the last ninety days.
Then, we filed a materialmen’s lien on their behalf and sent the obligatory copies of the liens to the homeowners’ association and the management company. Within days of their receipt of our letter, we received a telephone call from the management company stating that they intended to pay the debt in full. Five days later, we received a certified check payable to our client in exchange for releasing the materialmen’s lien. Needless to say, our client was very happy.
These results may not be typical. You may or may not have similar results if you file materialmen’s liens for your bad debt, but unless you (i) preserve your lien rights if you are a supplier or subcontractor and (ii) timely file a valid construction lien, then you may not get any payment of the money you are owed.
In the current economy, commercial collections of accounts is increasingly more difficult. Debtors own fewer and fewer assets which may be attached by creditors; thus, it is imperative that suppliers, subcontractors and contractors in Georgia who are not seeing payments file valid liens. Please contact the Cobb Law Group to see if you are able to file a mechanics lien and increase your recovery rates!
I am regularly greeted on the telephone with the question, “Can I file a lien?” As you know there are numerous types of liens which a person who is owed money may file against the person who owes them money. But, we are a construction law firm in Georgia which means that we prepare and file a lot of materialmen’s liens on behalf of our clients. So, although we cannot always tell someone whether or not they can file some other type of lien, we can usually advise them whether or not Georgia’s lien laws allow them to file a materialmen’s lien in their particular matter. Incidentally, it is interesting to note that such liens in Georgia are referred to as “Mechanics Liens” or “Materialmen’s Liens”, but they are substantially similar to other states’ counterparts such as “Construction Lien”, “Subcontractor Lien” , “Supplier Lien”, “Architect Lien”, “Engineer Lien”, “Surveyor Lien”, “Forester Lien”, etc.
The Official Code of Georgia (O.C.G.A) Section 44-14-361 states that the following types of people may file materialmen liens in Georgia:
(1) All mechanics of every sort . . . for work done and material furnished in building, repairing, or improving any real estate of their employers;
(2) All contractors, all subcontractors and all materialmen furnishing material to subcontractors, and all laborers furnishing labor to subcontractors, materialmen, and persons furnishing material for the improvement of real estate;
(3) All registered architects furnishing plans, drawings, designs, or other architectural services on or with respect to any real estate;
(4) All registered foresters performing or furnishing services on or with respect to any real estate;
(5) All registered land surveyors and registered professional engineers performing or furnishing services on or with respect to any real estate;
(6) All contractors, all subcontractors and materialmen furnishing material to subcontractors, and all laborers furnishing labor for subcontractors for building factories, furnishing material for factories, or furnishing machinery for factories;
(7) All machinists and manufacturers of machinery, including corporations engaged in such business, who may furnish or put up any mill or other machinery in any county or who may repair the same;
(8) All contractors to build railroads; and
(9) All suppliers furnishing rental tools, appliances, machinery, or equipment for the improvement of real estate.
So, as you can see, Georgia’s lien laws casts a wide net allowing many categories of workers to claim materialmen’s liens on their construction projects if they are not paid. You probably knew that electricians and plumbers could file liens; now, you know that architects, foresters, surveyors, and many others may also be entitled to claim a lien to help them collect on past due accounts.
Hopefully, you receive payment on all of your projects, but if you are owed money for your services or materials used to improve real estate, then please feel free to contact the Cobb Law Group to help answer your questions about your rights to file a materialmen’s lien.
We receive a lot of telephone calls from subcontractors and suppliers who are seeking to file mechanics or materialmen liens. And, we are frequently asked why they should use a law firm to file their construction liens when the internet offers lien filing services who promises to do the same work for less money. That’s a good question. Here are some of the things we usually tell people:
We are good at what we do, and, simply stated, I do not know any lien services that provide the same quality of work. Lien laws change and each individual matter may fall into a category or an exception. Let us help.
Lien filing services may be less expensive in the beginning, but the costs to enforce their liens may be higher. In most cases, for example, we file a legal description of the real estate to be liened which is one thing they do not do; without a legal description it is very difficult to know if the lien properly “attaches” to the property. Without proper attachment, your lien may not be valid, it may not show up in the real estate records, it may not meet all of Georgia’s lien requirements, and you will probably not get paid.
We understand and educate you regarding the exceptions. Our expertise brings value to the table. If you lien cannot be filed for some reason–e.g., you did not send a Notice to Owner and a Notice to Contractor–we are able to review the facts to see if you fall into an exception to this requirement which, if allowed, may validate your lien and improve your chances of recovery.
In this economy, we all watch every dime that is spent; however, sometimes you have to invest in your collection to help you increase the likelihood of recovery. Simply stated, lawyers are more likely to get a response from your debtor than a commercial service.
We can handle your entire case. You don’t hire us just to file a materialmen’s lien, we can see your debt through completion. We do file lien, but we engage the debtor’s when they contact us to get you paid. We offer payment plans, Consent Judgments, and other ideas that increase your recovery.
It can be the difference between a tricycle and a jet.