by Mark A. Cobb
Since our law firm has a significant core practice area in which we file and perfect mechanics & materialmen’s liens and payment bond claims throughout Georgia, we address prospective clients’ lien questions almost everyday. We are surprised how many contractors and suppliers’ knowledge of Georgia’s construction lien requirements is based upon obsolete lien laws. In 2009, the Georgia legislature approved several significant changes to the Georgia’s Mechanics and Materialmen’s Lien Act. Since we continue to get so many questions regarding these changes, we thought a brief review of the changes made to Georgia’s lien laws in 2009 would be useful to many potential Georgia lien claimants:
SOME OF THE SIGNIFICANT 2009 GEORGIA LIEN LAW CHANGES:
- Date Georgia’s 2009 Lien Law Revisions Went Into Effect: March 31, 2009;
- Notice to Contractor/Notice to Owner: These notices to contractors (sometimes called Notices of Furnishing) must be sent to the owner and the contractor by registered mail, certified mail or statutory overnight delivery at the addresses specified in the Notice of Commencement (the former statutes did not specify the method these notices were to be given);
- Deadline for Filing a Claim of Lien: A Claim of Lien must be filed within 90 days after the lien claimant actually worked on the project or supplied materials to the project (the former requirement was more ambiguous requiring that a claim of lien be filed within three months from the last day worked); it is very important to note that Georgia’s new lien waiver forms may, for all practical purposes, shorten this deadline to sixty days from the date the lien waiver was signed;
- Deadline for Sending a Copy of the Lien to Owner & Contractor: A lien claimant is required to send a copy of the lien to the owner (and, if a Notice of Commencement was filed, to the general contractor) within two business days after the claim of lien is filed (the former lien requirement was ambiguous as to the deadline for sending a copy of the lien to the owner);
- Deadline for Perfecting or Enforcing a Claim of Lien: A lien claimant must file a legal action against the party with whom the lien claimant contracted within 365 days of the date the lien was filed (the former requirement was more ambiguous requiring that a legal action be filed within one year of the last day worked by the lien claimant); it is important to note that this deadline may be expedited if the property owner or the general contractor files a Notice of Contest of Lien (see below);
- What is a Legal Action (for purposes of lien enforcement): Georgia’s lien statute specifies that the lien claimant’s obligation to file a “legal action” may include filing a lawsuit, filing a proof of claim in a bankruptcy proceeding, or filing a demand for arbitration action (the former statute did not include arbitration as a legal action which would perfect the lien);
- Deadline for Filing a Notice of Action: The lien claimant must record its Notice of Filing of Action For Claim on Mechanics and Materialmen’s Liens within 30 days from the date it began a legal action to enforce its lien rights (the former statutes required that this notice be filed within 14 days);
- Notice of Lien Discharge Bond: If an owner, contractor or other interested party files a bond to discharge a materialmen’s lien, then, within seven days of filing a bond to discharge a lien, the party filing the bond must give the lien claimant notice of the filing of the bond (the former lien provisions did not require that notice be given to the lien claimant);
- Notice of Contest of Lien: This is an entirely new section which allows property owners and contractors the ability to accelerate the lien claimant’s deadline to file a legal action to enforce its lien claim; it is important to note that a properly filed lien contest will shorten the lien claimant’s deadline to file a legal action to enforce its lien to 60 days from its receipt of the notice;
- New Georgia Lien Waiver and Lien Release Forms: The revisions introduced new interim lien waiver forms and new final lien waiver forms as the only acceptable lien waiver forms to be used in Georgia; some of the material changes to the new forms include (i) specific language requirements; (ii) requirements that capital letters and a 12-point be used, (iii) the new forms release bond rights as well as lien rights, and, perhaps most importantly, (iv) sixty days after the lien waivers are signed, conditional lien waivers become unconditional lien waivers;
- New Affidavit of Nonpayment Form: Similarly, the statutory form for the Affidavit of Nonpayment has been changed and the older form should not be used any longer; changes to this form include (i) required formatting to include capital letters and font size, (ii) specific language required, (iii) the deadline for filing an Affidavit of Nonpayment has been extended from 30 days to within 60 days, and (iv) if an Affidavit of Nonpayment is filed, then within seven days of filing, a copy of the Notice of Nonpayment must be sent to the property owner (and if a Notice of Commencement had been filed then notice must also be sent to the general contractor);
- New Claim of Lien Form: The Georgia Claim of Lien form was revised to include (i) statutory required language, (ii) specific language printed in 12 point bold font, and (iii) clarification that the date when the claim became due is that last day in which a contractor or subcontractor actually worked on the real estate or a material supplier provided materials for use on the project.
Please keep in mind that this article is a brief summary of the significant changes to the lien laws made by the Georgia legislature; there are additional changes which have not been covered in this article; similarly, this article does not include matters which did not change (but with which lien claimants must strictly comply); thus, if you have a potential construction lien claim or if you are an owner or a general contractor trying to address a claim lien against your project, then you should contact an experienced Georgia construction law attorney who can help you understand, evaluate and file the claim of lien. Contact the Cobb Law Group to help you with your lien claim today!
We invite you to leave a comment below and tell us how the 2009 changes in the Georgia Lien Laws have affected you or your business.
Recently, we wrote a post about Georgia Affidavits of Nonpayment which are documents with which every subcontractor and supplier working on Georgia construction projects should be familiar. In summary, if you sign a lien waiver but you don’t receive payment, then within 60 days of the date of the lien waiver, you must file an Affidavit of Nonpayment in the real estate records of the county where the real estate project is located. These deadlines must be met, and failure to do so may result in complete inability to collect your money from your contractor or customer, file a materialmen’s lien, or make a claim against a payment bond. This is so important, and we have received so many telephone questions, that I invite you to review our full post for more information.
Several people have for asked the “next” step.
If you are paid for your services, then you may not have to do anything else. According to the Georgia Code, those affected by the Affidavit of Nonpayment which you file (such as your customer, the general contractor, the property owner, etc.) may request that you file an Affidavit of Payment in order to “cancel” the Affidavit of Nonpayment you had received. If you are requested to prepare one, you must do so. On the other hand, your Affidavit of Nonpayment will eventually expire of its own accord typically upon the earlier of (i) your execution of a subsequent interim lien waiver or final lien waiver or (ii) 90 days after you stop your performance on the job.
If you do not receive payment very shortly after filing your Affidavit of Nonpayment, then you are (likely) on a very short time schedule in which to file your mechanics or materialmen’s lien or make your payment bond claim. Your deadline to file a construction lien or file a claim against a payment bond ends 90 days from the date you were last on the jobsite–the calculation of this period has nothing to do with the deadlines required for Affidavits of Payments. Click here to read more about Georgia’s lien laws.
PRACTICAL TIP: Calendar your deadlines:
1. If you execute any lien waiver, then make sure you promptly receive payment; if you do not receive payment within 45 days, consider contacting a Georgia construction lawyer;
2. All mechanics and materialmen’s lien in Georgia must be filed within 90 days of the last day in which you were on the project. This period is not extended even if you file an Affidavit of Nonpayment so contact a Georgia construction lawyer around 60 days following your last day on the job; and
3. Most payment bond claims must be filed within 90 days of the last day in which you worked on the project. This period is not extended even in you file an Affidavit of Nonpayment; so, make sure you contact a Georgia construction lawyer around 60 days following your last day on the job.
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.