Georgia Construction, Bond & Lien Law Blog


GEORGIA LIEN WAIVERS MAY SHORTEN THE DEADLINE FOR FILING A MATERIALMEN’S LIEN TO SIXTY DAYS!

By:  Mark A. Cobb

Cobb Law Group

Most of the subcontractors and specialty trade suppliers we speak to understand that all materialmen’s liens filed in Georgia must be filed within ninety days of the last day in which they worked or supplied materials to the job.  However, very few of them understand that signing an interim lien waiver (or a final lien release) SHORTENS the deadline for filing a Claim of Lien in Georgia!

PRACTICAL TIP # 1: Change your mindset from 90 days from the last day worked to 60 days from the date of the lien waiver or 90 days from the last day worked–whichever is shorter!

That’s right, if you sign either a Interim Waiver & Release Upon Payment (a/k/a Interim Lien Waiver) or  Final Waiver & Release Upon Payment (a/k/a Final Lien Release), then you have only 60 days from the date of the lien waiver in which to either (i) file an Affidavit of Nonpayment or (ii) file a lien pursuant to the Georgia Mechanics and Materialmen Lien Act.

The reasoning behind this oft-misunderstood rule is based upon the purpose of the lien waiver.  In Georgia, lien waivers are essentially a document that a subcontractor or supplier signs which states (i) the amount due through a certain date and (ii) if the entity executing the lien waiver doesn’t let the construction project owner know that payment has been received with 60 days, then (iii) after 60 days, the owner can assume that payment was received (even if you didn’t receive the payment!).  Thus, it is reasoned, that if you execute any lien waiver or Release, and you are not paid within 60 days of the date of the lien waiver, then Georgia law presumes that you received payment; and you are prohibited from filing a Claim of Lien after the expiration of the sixty days from the date of the lien waiver.

So how do I calculate the deadline for filing a mechanic’s lien in Georgia?

  • First, calculate the 90th day from the date that you were last physically working on the Georgia project or delivered materials to the project; your deadline to file a Claim of Lien is before the 90th day (remember that weekends and holidays do not extend the deadline to file so you may actually only have 87 days following your last day worked to file your Materialmen’s Lien in Georgia–> click here for more information on calculating deadlines!)
  • Second, if you signed a lien waiver, then calculate the 60th day from the date you signed the lien waiver; your deadline to file a Claim of Lien (or file an Affidavit of Nonpayment) is before the 60th day you just calculated (weekend and holidays probably to do not extend this deadline!)
  • Third, compare the two deadlines which you just calculated–the first deadline to expire is your deadline to file your lien in Georgia!

For example, let’s analyze the lien deadline for  a concrete supplier who provided materials to a Georgia construction project (private or public works); the last day they delivered materials was March 1; on March 15, they were asked to execute a Final Waiver and Release Upon Payment.  If the concrete supplier does not receive payment, what is the deadline for filing a construction lien?

  • Calculate 90 days from last day worked:  Since they last delivered materials on March 1, the 90th day following this is May 30; in fact, however, the lien must be filed prior to May 30 (therefore, the lien must be filed on or before the last business day before May 30);
  • Calculate 60 days from Lien Waiver: Since the lien waiver was signed March 15, the cement supplier has until May 14 in which to file an Affidavit of Nonpayment or file a Claim of Lien.
  • Compare the date and go with the shortest! Thus, there is a May 29th deadline and a May 13th deadline.  Since the May 13 deadline to contest the lien waiver expires first, the concrete supplier’s deadline for preparing and filing a supplier’s lien in Georgia is the last business day before May 14.

These deadlines can be very tricky, so it is very important to calculate your deadlines carefully so that you are not caught without payment and without recourse.  If you have questions about filing and perfecting any type of construction lien in Georgia, please give us a call!

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.

GEORGIA CONTRACTING–BEWARE THE STATUTE OF FRAUDS!

Posted in Contracts,Practical Tips by Administrator on the June 19th, 2012

By:  Mark A. Cobb

Cobb Law Group

This economy has forced many Georgia businesses to review their practices and make adjustments for the economic realities associated with today’s market place.  Clients frequently contact us about collecting a debt they are owed for services, labor or material which they have provided.  In these instances, one of the first documents we want to review is the contract.  I am constantly amazed how many businesses, contractors, and suppliers fail to use written contracts!

There is some good news, Georgia law does allow some oral contracts to be binding.  Simply stated, this means that if you sold some supplies or if you provided labor or services to another and you haven’t been paid, you may be able to recoup your damages.  Without a contract, however, you may face greater difficulty in proving the terms of your transaction, the costs of collection may be higher or more time-consuming, and you may prevent you from collecting interest and attorneys’ fees.

Not just any oral contract is binding, however.  Georgia’s Statute of Frauds requires that certain contracts be in writing in order to be enforceable.  Specifically, O.C.G.A. § 13-5-30 states the following contract must be reduced to writing:

(1)    A promise by an executor, administrator, guardian, or trustee to answer damages out of his own estate;

(2)    A promise to answer for the debt, default, or miscarriage of another;

(3)     Any agreement made upon consideration of marriage, except marriage articles as provided in Article 3 of Chapter 3 of Title 19;

(4)     Any contract for sale of lands, or any interest in, or concerning lands;

(5)     Any agreement that is not to be performed within one year from the making thereof;

(6)     Any promise to revive a debt barred by a statute of limitation; and

(7)     Any commitment to lend money.

Georgia’s Statute of Frauds applies to many types of contacts in several areas of law; however, our business law clients and construction law clients probably recognize that many (and maybe all) of their contracts need to be in writing in order to not violate the Statute of Frauds.

PRACTICAL BUSINESS TIP # 1: With the assistance of a Georgia contract lawyer, develop a standardized business contract relevant to your industry, your customers, and your needs.

PRACTICAL BUSINESS TIP # 2: Review your existing contracts periodically (every year or so) and ask a Georgia contract lawyer to review it as well.  Occasionally, there are changes in the law, judicial holdings, as well as changes in business practices which need to be incorporated into your existing contracts.

PRACTICAL BUSINESS TIP # 3: Repeat certain contract terms in the “small print” on your invoices including such items as (i) your payment terms, (ii) interests, (iii) collection costs, (iv) waivers and warranties–if you do this, however, make sure they are consistent with your contract as inconsistent terms may result in your inability to enforce the terms of your contract.

If you have any questions, please feel free to contact any of us at the Cobb Law Group. And, please share with us your stories or comments regarding any successes or failures you have had with your own contracts.

CONTRACTORS BEWARE OF RETROACTIVE LIABILITY FOR DESIGN FLAWS

Posted in Contractor Liability,Current Legal Issues,Public Works Projects by Administrator on the June 7th, 2012

by:    Mark A. Cobb

Cobb Law Group

A recent development from the United States Supreme Court may have profound repercussions affecting almost everyone in the design, build and construction industries.

This case stems from the 2007 collapse of the I-35W bridge in Minnesota which killed 13 people.  The bridge, which had been designed by the engineering firm of Sverdrup & Parcel and Associates, Inc., was completed in 1967.  Forty years of use later, the bridge collapsed; although the causes of the bridge’s collapse are still contested, many professionals point to (i) design flaws caused by the original engineers and (ii) Minnesota’s Department of Transportation’s failure to adequately maintain the bridge.

Based upon fairness and foreseeability doctrines, every jurisdiction has a Statute of Repose, Statute of Limitations, Doctrine of Laches or similar concept which limits liability after a certain amount of time.  Perhaps this is an extreme example, but if the Roman Colosseum were to collapse, no one would expect to make the original builders liable.  It’s just been too long!

1964–Minnesota’s Statute of Repose: In 1964, the State of Minnesota enacted a Statute of Repose which limited actions arising from construction projects to ten years.  In other words, the engineers and builders could not be held liable for claims arising from their work after ten years from the completion of the construction.  In our example, the builders of the bridge could not be liable for any claims arising from their work after 1977 (tens years from the bridge’s completion).  In 1980, Minnesota amended its Statute of Repose to extend liability for an additional 5 years; thus, if this amendment were applied retroactively, those designing and constructing the bridge would not have any liability after 1982 (fifteen years from the bridge’s completion).

2008–Minnesota’s Enacts Compensation Statute: After the collapse of the bridge in 2007, Minnesota enacted new legislation in 2008 known as the “compensation statute”.  This legislation allows Minnesota to recoup any payments which the state made to the victims of the collapse from the builders and contractors who worked on the bridge.  Thus, although the state’s Statute of Repose limited the contractors’ liabilities after 15 years, a statute enacted 41 years after the bridge’s completion sought to retroactively impose liability on the engineers and builders!  In fact, the original designers of the bridge (Sverdrup & Parcel and Associates, Inc.) is no longer intact and has become a part of Jacobs Engineering Group, Inc.

2012–Impact on Contractors: So what has been happening since the enactment of the 2008 statute?  It has been in litigation.  At the state level, Jacobs Engineering (the successor entity to the bridge’s original design group) has been arguing the unconstitutionality of the 2008 legislation.  As the case has worked its way through the state court system, the new compensation statute has been upheld by the Minnesota courts.  Finally, after the statute was upheld by the Minnesota Supreme Court, Jacobs Engineering filed a writ of certiorari to the United State’s Supreme Court which asked the high court to review the 2008 legislation and its applicability to construction work completed in 1967 (Jacobs Engineering Group Inc., v. State of Minnesota).  Last week, the Supreme Court denied Jacobs Engineering’s request and refused to hear the case.

The impact of this case has wide implications involving contractor liability, retroactive legislation, inability to assess risks; not only that, it opens the field for other states to re-establish liability on construction professionals long after fairness–or even state statute!–allows.

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.

iPhone and Android Heat Index App for Construction Workers

Posted in Miscellaneous,Practical Tips by Administrator on the June 4th, 2012

by:   Mark Cobb

Cobb Law Group

This afternoon, our expected highs will be in the mid 90′s!  This is hot!  It doesn’t matter whether you are sitting in your house by an air conditioning vent, running errands or working outside, this is hot!.  Because many of our clients are construction professionals and many of their employees work outside, we thought you might appreciate learning about a new mobile phone app for those who spend time outside.  In fact, OSHA’s website has some useful tools for those outside in the heat including a mobile phone app that helps calculate the heat index.  Click here to download the heat index app for your iPhone or Droid mobile phone!

According to the OSHA website:

“When you’re working in the heat, safety comes first. With the OSHA Heat Safety Tool, you have vital safety information available whenever and wherever you need it — right on your mobile phone.

“The App allows workers and supervisors to calculate the heat index for their worksite, and, based on the heat index, displays a risk level to outdoor workers. Then, with a simple “click,” you can get reminders about the protective measures that should be taken at that risk level to protect workers from heat-related illness—reminders about drinking enough fluids, scheduling rest breaks, planning for and knowing what to do in an emergency, adjusting work operations, gradually building up the workload for new workers, training on heat illness signs and symptoms, and monitoring each other for signs and symptoms of heat-related illness.”

For more information about safety while working in the heat, see OSHA’s heat illness webpage, including a new online guidance about using the heat index to protect workers

If you try this new app, we’d enjoy hearing your response about its effectiveness.  Please leave us a comment today!