Georgia Construction, Bond & Lien Law Blog


Criminal Sanctions–A Warning to Georgia Contractors and Subcontractors!

Posted in Criminal Issues & Sanctions by Administrator on the May 29th, 2012

Did you know that it can be illegal for a contractor or subcontractor on a Georgia construction project to accept payment for work on the project if they do not, in turn, pay their suppliers and laborers?  That’s true, according to the Official Code of Georgia Annotated (O.C.G.A.);  in fact it’s a felony if the contractor or subcontractor intends to defraud its subcontractors and suppliers!

O.C.G.A. § 16-8-15 states as follows:

“Any architect, landscape architect, engineer, contractor, subcontractor, or other person who with intent to defraud shall use the proceeds of any payment made to him on account of improving certain real property for any other purpose than to pay for labor or service performed on or materials furnished by his order for this specific improvement while any amount for which he may be or become liable for such labor, services, or materials remains unpaid commits a felony and, upon conviction thereof, shall be punished by imprisonment for not less than one year nor more than five years or upon the recommendation of the jury or in the discretion of the trial judge, punished for a misdemeanor, provided that, in addition to the above sanctions, where a corporation’s agent acts within the scope of his office or employment and on behalf of the corporation and with intent to defraud uses such proceeds for purposes other than for property improvements or where a corporation’s board of directors or managerial official, the latter acting within the scope of his employment and on behalf of the corporation recklessly tolerates or, with intent to defraud, authorizes, requests, or commands the use of such proceeds for purposes other than for property improvements, the corporation commits a felony and, upon conviction thereof, shall be punished by a fine of not less than $1,000.00 nor more than $5,000.00.”

If you have any questions regarding this statute or construction law services offered by the Cobb Law Group, please contact us for further information.
This is a general information article and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

Payment Bond Claims on Privately Owned Construction Projects in Georgia

Posted in Materilamen's Liens,Payment Bonds,Public Works Projects by Administrator on the May 17th, 2012

You probably know that payments bonds are a great way to increase the likelihood of getting paid for the work you perform or the materials you supply on Federal, state and local government projects in Georgia.  But, did you know that private construction projects can also have payment bonds?

Public Works Projects and Payment Bonds: Since public policy prohibits a supplier or a subcontractor from filing and foreclosing a claim of lien against a public project, the federal and state governments have established a bonding procedure to protect the interests of construction professionals who are not paid for their work and supplies.  All construction contracts in excess of $100,000 for any public works located in Georgia (this includes Federal public works projects as well as State of Georgia and local municipality public works projects) must be covered by a payment bond.  Payment bonds may also be issued for smaller public works projects.  Because these federal, state and local construction projects are governed by statutes, payment bond claims against government projects are (largely) governed by statutes.  Federal projects, for example, are governed by The Miller Act.  The State of Georgia has enacted two separate code sections relating to payment bonds: one covers construction projects owned by the State of Georgia, and one covers construction projects owned by counties and local municipalities in Georgia (collectively, these are referred to as the Little Miller Act because it mirrors its federal counterpart).  For more information, on public works payment bonds, please click here.

Private Construction Projects and Payment Bonds: Government public works projects require payment bonds by statute, but there is no requirement that privately-owned construction projects must be covered by a payment bond.  Nonetheless, an owner or a general contractor may also include a payment bond.  If so, that is probably great news for any sub-contractor or supplier working in Georgia!  However, since payment bonds are not required by statute, they are not as regulated by statute as the public works payment bonds.  Instead, they tend to be governed by contract; specifically, they are governed by the contract between the surety (the insurance company providing the payment bond, the obligee (the person requiring the bond), and the obligor (the person performing the construction contract).  What does this mean?  It means you should obtain a copy of the payment bond as soon as possible and read it!  It will set out the method(s) of making a claim as well as the deadlines.

Payment Bonds and Mechanics and Materialmen’s Liens on Private Projects: Even if the private project on which you are working or supplying materials in Georgia is covered by a payment bond, then you are still allowed to file a claim of lien if you are not paid.  This is a boon to sub-contractors and suppliers as it gives them multiple options for collecting the money they are owed.

Needless to say, payment bond claims on public works projects, payment bonds claims on private projects, and mechanics and materialmen’s lien claims each have their own requirements and deadlines.  If you have provided labor or materials on a project but you haven’t received payment, please contact a construction lawyer in Georgia who can assess your claim and help you navigate the requirements and meet the deadlines to file your payment bond claim and construction liens.

This is a general information article on Georgia construction law and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

Cutting Construction Costs

Posted in Miscellaneous,Practical Tips by Administrator on the May 15th, 2012

Today, the Cobb Law Group is pleased to welcome a guest post from a consultant to the construction industry; we hope that you will leave us comments and feedback regarding this article!

During tough economic times, cost-cutting is essential in order to stay competitive. However, if done the wrong way, Cutting Costs on Construction Projectscost-cutting can have a detrimental impact on the project’s outcome. Construction project management techniques can help keep the costs of a project down without losing quality in your work. In fact, with the right management and smart choices, finding ways to save money can lead to improvements in field operations and business as a whole.

Clearly Communicate with Divisions and Workers

Moments of miscommunication can easily create complications which take valuable time to resolve. Communication between divisions of your business should be clear and effective. You may want to research technologies to find out if there are new ways you can streamline your communication process to increase efficiency. Of course, you also need software that is within your budget and that has benefits which will lead to savings over time.

In field operations, make sure your foremen provide objectives and clearly state time limits for every task. Sometimes foremen create a deceptive impression of being effective as managers even when they do not state daily goals in numbers. In general, workers respond best to specific, measurable tasks with reasonable deadlines. This keeps everyone on track and focused.

Have a Plan of Action for All Team Members

Develop daily action plans that fully utilize your labor force. Make sure that your workers are putting energy in the places where they work most efficiently in order to save time and money. In the construction business, daily plans change according to outside factors such as suppliers and weather conditions. Create action plans with built-in flexibility, and use daily logs to record progress, note barriers to completion and log the effectiveness of your plans.

Always Improve Field Performance

Try to lower construction costs over time rather than gradually raising them. This is a key difference between being an employee and being a business owner or manager. An employee can gradually ask for more money as expertise grows. A business needs to become increasingly competitive in order to maintain position in the market. The companies that prove successful tend to adopt this strategy. Use all the experience you gain to find ways of improving efficiency levels for future projects.

Closely Manage Indirect Labor

Indirect labor costs needs to be clearly calculated in order to improve field performance.  Indirect labor can include time spent on paperwork and in meetings, time spent driving on the job or briefly repairing equipment and preparation or light work time in the yard.

To manage costs, make sure to include these tasks in your cost codes. Have your laborers report the time they spend on each one. If you are not currently monitoring your indirect labor costs, you may be able to save anywhere from 10% to 30% of your project budget.

Know When to Negotiate

When saving money, it is better to have a few suppliers and maintain strong relationships with them rather than to have many suppliers and weaker networking ties. With strong relationships, you can often negotiate better deals when you need them. If your suppliers feel invested with you, they will be more likely to work with you to maintain your business and theirs.

Maintaining Your Construction Business

Cost-cutting always needs to be done wisely and with future business in mind. Basically, you want to optimize your construction work so that when economic times change, you are simply more seasoned and more competitive. Use your new initiative to improve your field performance and better manage your budget, saving money, maintaining quality and strengthening your business.

Erin Palmer works for University Alliance and writes about many of their PMI certification prep courses. Each of UA’s partner schools offers helpful articles on topics such as construction project management training.

 

This is a general information article on Georgia construction law and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

Payment Bond Claims on Public Works Projects in Georgia

Posted in Government Contracting,Payment Bonds,Public Works Projects by Administrator on the May 10th, 2012

Payment Bond Claims in GeorgiaThe pundits continue to debate the state of the economy, but since we represent so many construction professionals, we are able to notice trends pretty quickly ourselves.  To no one’s surprise, government contracting work has increased, and this has given much-needed work to subcontractors, and suppliers in Georgia.  Many clients who had stayed away from public works projects have since embraced them.

Unfortunately, we have noticed that government contract jobs in Georgia have been “slow pay”.  What does that mean for those working and supplying on government jobs?  Practically speaking, it means that our clients’ cash flow is interrupted–usually for no reason.  It also means that they are having to enforce their payment bond claim rights in Georgia.

Almost every day, we receive a telephone call from a specialty subcontractor or a supplier who is not getting paid for their work and materials on a government project.  Fortunately, if a payment bond claim is timely filed, then their likelihood of recovery is very good.  Here are some important points to keep in mind if you are working on a government project.

  • Know Whether the Project Owner is a Governmental Entity: Be very careful to identify the owner of the public works project on which you are working.  Some projects may look like they are owned by the Federal, state or local government, but, in fact, they are owned by a private entity.  Public or military housing projects can be owned by a private corporate and then leased back to the government.  Determining the owner helps determine which set of requirements apply in your particular situation.  Development Authorities, Housing Authorities, and similar “government” organization can blur the distinction between owners.  (Remember, just because there is a payment bond covering the project does not mean that it is a government project–payment bonds may be found on private projects too!)
  • Know the Government Entity Layer: If you know that your project is a government contract, then you must determine for which governmental layer the project belongs.  Generally speaking, your government project may be Federal, State of Georgia, or a local municipality (such as a county or city government).  Each of these three layers of government are covered by their own statutes and requirements for payment bond enforcement.  All Federal projects are covered by The Miller Act; all State of Georgia projects are coverer by The Little Miller Act so it is vital to apply the proper rules to your slow-pay issue.
  • Meet the Deadline for Filing a Payment Bond Claim in Georgia: Typically, you must file a claim within 90 days of the last day in which you worked on the governmental project.
  • Get a copy of the Payment Bond: The surety issuing the payment bond covering your project will have certain requirements and can help identify owners, general contractors and addresses.  Some general contractors make obtaining copies of the payment bond available, some do not.
  • Make Sure that You Sent A Notice to Owner/Notice to Contractor: If you are a third tier supplier or subcontractor then you must send a Georgia Notice to Owner (“NTO”) and a Georgia Notice to Contractor (“NTC”) on all projects owned by the State of Georgia or any local municipality.  These NTO’s and NTC’s must be sent within thirty days of the first day in which you began working on the government project or you began supplying on the government project.  If you fail to do this, you may be prohibited from filing a claim against the payment bond.

If you have any questions about contractor rights or suppliers’ rights regarding government bond claims on projects located anywhere in Georgia, please contact us.

 

This is a general information article and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.