When a mechanics or materialmen’s lien has been filed in Georgia, that lien remains valid for one year from the date that the lien was filed. For many of our clients that is enough time to settle the claim and get paid-perhaps they have negotiated a settlement, participated in arbitration or mediation, or received payment in full. Unfortunately, that is not the case in every situation, and sometimes your debt is not resolved within one year. So, if you are not paid within one year, how do you get your lien to continue beyond this one year statute of limitations?
In the simplest terms, Georgia requires that you must take two steps in order to keep your construction lien enforceable for longer than one year. First, a lawsuit must be filed against the party who owes you money within one year of the date on which your lien was filed (“Lawsuit”). This is typically a standard collection law suit.
Second, within 30 days of filing your Lawsuit, you must file a document officially called a Notice of Filing of Action for Claim on Mechanics and Materialmen’s Liens (which we frequently refer to as a “Notice of Action”). The Notice of Action is filed with the real estate records where you filed your liens and must contain very specific information such as a cross-reference your original lien and detailed information related to your Lawsuit. In addition, this Notice of Action must be served on the true owner of the real estate which was liened vie certified mail. The purpose behind the Notice of Action is to let the owner know what is happening and it tells the world at large that you are enforcing your lien rights. Thus, when someone is researching a title in the real estate records, they should discover that your lien was filed; if the lien is older than a year, then they will look for a Notice of Action and discover that your lien has been extended.
The Notice of Action is a necessary part of preserving your lien rights in Georgia. If the Notice of Action isn’t filed timely (and other statutory requirements are not met) then you lien will probably be invalid. Thus, it is very important that you chose a law firm familiar with Georgia’s lien requirements in order to enforce your rights. Please contact us if we can help you in any way with either of these steps to help you enforce your lien.
Some of our clients refer to us a Georgia Lien Lawyers. And, yes, we file a lot of materialmen’s liens throughout the State of Georgia; but that is only part of all that we do. Another area which keeps us very busy is the filing and prosecuting of payment bonds on behalf of clients. So, what the difference between a construction lien and a payment bond claim?
First, mechanics or materialmen’s liens may be filed by contractors, subcontractors and suppliers on private construction projects when they are not paid for their services. A private project is generally a construction project owned by an individual or a business entity (such as a corporation or an LLC). For more information on liens, check out our post on Georgia Lien Law.
When a supplier, subcontractor or contractor is not paid on a public project, a lien cannot be filed. But, they can probably make a claim against a payment bond. A payment bond, in simple terms, is an insurance contract between the governmental entity which owns the project or the prime contractor and the insurance company. This insurance policy basically promises to pay subcontractors and suppliers in the event that the governmental entity or the prime contractor do not! Here are some things to keep in mind regarding payment bond claims:
• Although the rules and requirements are very different than Georgia’s laws for filing materialmen’s liens, there are some similarities. One similar deadline, for example, is that payment bond claims must be made within ninety (90) days of the last date in which you worked on the project;
• Payment Bonds on Federal Government Projects are governed by federal law commonly referred to as “The Miller Act”; Payment Bonds on Georgia projects are governed by state law commonly referred to as “The Little Miller Act”; although federal and state law has many similarities, they are different laws and each must be met in order to effectively make a claim;
• If the governmental entity or the general contractor files a Notice of Commencement, then those who are not in privity of contract with either the project owner or the prime contractor must send a Notice to Owner and a Notice to Contractor (“NTO”) in order to preserve the right to file a Payment Bond Claim;
• Read the payment bond! Each payment bond has information which is very useful to the subcontractor and supplier and will set forth the requirements to make a claim against the payment bond and the deadline for filing a lawsuit against the bonding company in the event that a lawsuit become necessary;
• Navigating the rules to enforce your bond claim rights can be confusing and difficult; therefore, we encourage you to contact a Georgia Payment Bond Lawyer to assess your claim and help you get paid.
We would also like to point out that there are other, common types of Payment Bonds; some private construction projects also have payment bonds. We plan to discuss these in the near future. In the meantime, if you have any comments or questions, we’d enjoy hearing from you.