by Mark A. Cobb
Many clients ask about Georgia’s Notice of Intent to File Lien requirements, and there are always surprised to hear the short answer: Georgia does not require any type of Notice of Intent to File Lien. However, the longer answer may provide some helpful insight for a lien claimant getting the money they are owed. Let’s explore this a bit further . . .
In Georgia a Notice of Intent to File Lien is not the following:
First, let’s take note of what a Notice of Intent to File Lien is not. It is NOT the same as a Notice to Owner or Notice to Contractor (sometimes called a Notice of Furnishing). In order to take advantage of Georgia’s lien statutes, certain subcontractors and suppliers are required to send a Notice to Owner/Notice to Contractor within the first 30 days that they begin working or supplying to the construction project. Thus, it is important to understand the difference between a Notice of Intent to File Lien and a Notice to Owner. For more information on Georgia’s Statutory Construction Notice Scheme, please click here > >
Similarly, a Notice of Intent to File Lien is NOT a Preliminary Lien. The Georgia Mechanics and Materialmen’s Lien Act includes a section on filing Notices of Preliminary Lien. A preliminary lien is not a Claim of Lien under Georgia law; instead, it is an optional tool used by subcontractors and suppliers to defeat contractor affidavits and put the owner on notice that the potential lien claimant is performing work or supplying materials to the project. For more information on Georgia’s Preliminary Lien scheme, please click here > >
In some states, a Notice of Intent to File Lien is a prerequisite to filing an action lien claim. In Georgia, however, potential lien claimants do not need to send a Notice of Intent to File before filing a construction lien, stop notice or making a bond claim.
What Use does a Notice of Intent to Lien have in Georgia?
As mentioned above, some states have specific requirements regarding the timing and use a Notice of Intent to File Lien; since Georgia does not currently have this requirement, we have the option of using it to help our clients get their payments more quickly and less expensively.
Since Georgia does not have a requirement that lien claimants send a Notice of Intent to Lien prior to filing their claim of lien with the clerk of court, the project owner or the general contractor may not be aware of any downstream payment problems until they receive notice that a lien has filed. Responsible project owners and general contractors often involve themselves immediately upon their receipt of a copy of the lien; this, of course, can lead to prompt payment (which is the goal!). Imagine, however, if the lien claimant had send a notice to the project owner, the general contractor, the surety and other interested parties prior to filing the lien. This would give responsible project developers and contractors the ability to involve themselves in the payment issues and, possibly, lead to a prompt payment to the potential lien claimant.
Using such a notice–a (unofficial) Notice of Intent to File Lien–could be effectively used to inform those parties upstream of a subcontractor payment issue without the cost and expense of preparing an filing a materialmen’s lien.
Furthermore, since Georgia has no statutory requirement for an Intent to Lien, that means that such a letter can be customized to reflect such information as the potential lien claimant needs to encourage voluntary payment by the owner or contractor. For example, some of the notice which we have sent on behalf of clients may be very succinct and to the point. For example, it may say:
ABC SUB-SUBCONTRACTOR was engaged by ABC SUBCONTRACTOR to perform work on the NEW PROJECT located in YOUR TOWN, GEORGIA; to date, ABC SUB-SUBCONTRACTOR is owed $_____ for it work. Unless payment in full is received within five (5) business days, then notice is hereby given that ABC SUB-SUBCONTRACTING will file a lien against said project pursuant to the Georgia Mechanics and Materialmen’s Lien Act.
In other situations, it may be useful to provide more details, include copies of such documents as the following:
- Outstanding pay apps
- the sub-subcontract (or highlight relevant provisions from the sub-subcontract)
- detailed narraitve of the facts including work performed, communication issues
- subcontractor project accounting
- notices to owner/contractor (NTOs)
- a copy of the lien to be filed if payment is not forthcoming
Also, sometimes getting a notice from a subcontractor on an attorney’s letterhead can make a general contractor or owner pay a little more attention to the situation. For these and many other reasons, it is frequently recommended that a lien claimant send a Notice of Intent to Lien in Georgia so long as there is time to prepare and send the notice without missing the deadline to file the lien.
An Important Reminder Regarding Lien Deadlines
Regardless whether a lien claimant utilizes the advantages of serving a Notice of Intent to Lien on a construction project owner or a general contractor, it is important to note that sending such a notice DOES NOT extend the deadline to timely file a materialmen’s lien. In Georgia, liens must be filed either within 90 days of the last day of actual work on the job or 60 days from the date of a lien waiver whichever is shorter.
The Cobb Law Group is pleased to announce that construction attorneys Mark Cobb and Christopher Thurman will be presenting at an upcoming seminar on Georgia construction law. The course is organized by The Seminar Group and is called Construction Law in Georgia. It will be held on October 1, 2015 in Atlanta, Georgia.
This programs is designed for construction professions who want to mitigate risks on their projects. As the seminar brochure describes,
At this seminar, experienced construction attorneys will teach you how to comply with Georgia’s complex lien laws, how to collect on a judgment, and how to mitigate the harmful risks of bankruptcy. Our experts will also discuss the pitfalls of public construction contracts including government compliance programs and the significant risk of false claims, as well as recent insurance concerns impacting the construction industry.
Anatomy of the Georgia Claim of Lien: Using his decades of experience of filing and enforcing mechanics and materialmen’s liens throughout Georgia, Mark Cobb will begin the first session by presenting Anatomy of a “Claim of Lien” based upon his Georgia Material Supplier Collection Handbook. During this live presentation, Mark will offer practical guidance and useful tips that you can take back to your office and immediately implement. Specifically, he will focus on the following topics which are essential for every lien claimant to know and understand:
- Georgia’s Notice of Commencement–What it is and Common Mistakes During Preparation
- When to Send a Notice to Contractor and Notice to Owner (also sometimes called Notice of Furnishing)
- Essential Elements to Include in a Claim of Lien in Georgia
- Common Mistakes Made When Preparing and Filing Liens
- Advantages of Filing a Lien
- What amounts are lienable
- Lien Enforcement Through the Judicial Process (i.e., foreclosure of liens in Georgia)
- How to Perfect a Lien in Georgia
- What Happens to a Lien After it is Perfected
Project Insurance Needs: Every construction project–whether large or small–has insurance issues, and attorney Christopher Thurman will close the session with his presentation on “Recent Concerns for Everyday Insurance Matters”. He will offer tips and current legal trends regarding the various types of insurance available and how to make certain that you are covered when you need to be. His presentation will include the following topics:
- Sufficient Minimum Coverage
- Certificates of Insurance and Copies of Endorsements
- Additional Insureds
In addition to Mark and Christopher’s presentations, other experienced construction lawyers will present on such important topics as The Nuts and Bolts of Collections, Bankruptcy in the Construction Industry, Immigration Issues, What Contractors Need to Know About Labor & Employment Laws and How to Deal with FLSA Claims, and Public Construction Contract Law Update.
Collecting on a Judgment: Have you ever received a judgment against another party and wanted to collect against that judgment? If so, then the following topics will be covered in this engaging seminar: When and Where to Record a Judgment Obtained Against an Owner, Contractor, Subcontractor, or Supplier; How to Domesticate a “Foreign Judgment” in Georgia; How to Transfer a Georgia Judgment to Another State for Collection; the Most Effective Ways to Collect on a Judgment (including going against bank accounts, the debtor’s other projects, and wage garnishments); How to Discover Assets by Serving Post-Judgment Written Discovery such as Interrogatories and Requests for the Production of Documents, Taking Debtors’ Post Judgment Depositions; Tips for Asset Searches; as well as “Front-End” Planning Tips to Help Ensure a Successful Collections Process.
Bankruptcy & Construction Law: During the Great Recession, bankruptcy impacted many construction projects, and the seminar covers topics such as: How Does a Debtor’s Bankruptcy Filing Impact my Claim for Payment? What Happens to My Judgment if Bankruptcy is Filed? Can I Pursue Payment in Bankruptcy Court? Strategies and Tactics for Collecting “Around” the Bankruptcy Court; How to Deal with Lying, Cheating or Stealing in Bankruptcy (including fraudulent transfers of assets)?
Immigration & Construction Issues: Georgia’s construction industry is fraught with immigration minefields, and this topic will help educate and answer employers’ questions including the following: Does E-Verify Apply to the Construction Industry? Are There Legal Ways to Employ Undocumented Workers on a Construction Project? What are the Penalties for Using Undocumented Workers? Can Construction Workers in Georgia Obtain Work Visas? What if a Construction Worker has Children Born in the U.S. – Does That Impact His or Her Status?
Employment Law & Construction: Keeping a job site safe and secure requires a great deal of knowledge and work. At the seminar, business owners will learn about such vital issues as: Maintaining a Diverse Workforce Free from Harassment, Discrimination, and Retaliation; Accommodating Employees with Disabilities; Dealing with Family, Medical, and Military Leave Issues; Understanding the National Labor Relations Board’s Broad View of “Protected Concerted Activity;” and Applying the Fair Labor Standards Act to the Construction Industry.
Current Law: New laws are always being passed by the legislatures and administrative agencies, and older laws are being interpreted by courts and tribunals. Thus, the presentation current issues in construction law will cover such topics as New Federal Regulations Impacting the Construction Industry, Recent Georgia Legislation; The Who/What/When of Bid Protests; False Claims; Regulatory Compliance Programs; as well as a thorough Case Law Update on interpretations and changes to existing laws.
Continuing Education Accreditation: This course has been approved by the Commission on Continuing Lawyer Competency of the State Bar of Georgia for mandatory continuing legal education credit in the amount of 6.1 regular hours. This course has been approved by The American Institute of Architects for 6.25 LU’s. The Seminar Group is an AIA CES Approved Provider. This course has been approved by the IRMI for 7.0 hours of CRIS reaccreditation credits. Contractors and engineers may qualify for continuing education hours through the American Institute of Constructors or the Construction Management Association of America.
For more information about this incredible seminar on Georgia’s Construction Law, Mechanics Liens, Materialmen’s Liens, and related issues, please click here > >
by Mark A. Cobb
Since 1992, our construction law firm has been working with contractors, subcontractors and materialmen to help get them paid by using the advantages established under Georgia’s Mechanics and Materialman’s Lien Law Statutes. From time-to-time, we like to remind our readers of some of the advantages of this law, and offer practical tips to helping them get paid.
What are the different types of liens available to someone who has not received payment on a construction project in Georgia?
Generally speaking, there are many different names for the type of lien this blog article is discussing. Georgians usually refer to the liens filed by contractors and suppliers for nonpayment as “mechanics liens” or “materialman’s Liens”; in addition, some people (or other states) may refer to them as “construction liens”, “contractor liens”, “subcontractor liens”, “supplier liens”, “claim of lien” or something else. Regardless of what you call it, use Georgia’s lien laws to help get paid!
How do liens help me get paid?
It’s important to remember that when a problem occurs, there are different areas of law which may provide relief (like different tools in a tool box). Contract law, for example, governs every contract, and if you provide the labor, materials or services required under a contract, but you do not receive payment, then Georgia’s contract law spells out the rights the parties have. Thus, in a typical non-payment situation, contract law applies and the breaching party will likely have to pay the non-breaching party the amount due. In other words, the entity with whom you contracted owes you the money for your services. In construction scenarios, however, Georgia’s lien laws may offer you remedies (that is, other tools) against other people or entitles.
When you place a lien against someone’s property, you are asking the real estate to serve as collateral for the debt owed to you. And, this makes sense when you consider that the real estate (or the owner of the real estate) is the true beneficiary of your work or materials. For example, consider the following: an owner contracts with ABC General Contracting to build a building; ABC General Contracting, in turn subcontractors with XYZ Subcontractors for a portion of the work. If ABC fails to pay XYZ, then, under contract law, XYZ Subcontractor can seek payment from ABC General Contracting. If XYZ also files a mechanic’s lien against the project, then XYZ Subcontractor may be able to also seek payment from the Owner because XYZ’s work improved the value of the Owner’s property. In fact, without XYZ’s work or materials, the Owner’s property would, arguably, have a lower value. Thus, filing a Materialman’s lien can be similar to getting a retroactive personal guaranty!
Who can claim a lien under Georgia’s lien laws?
Georgia is fairly generous in allowing people (or companies) who haven’t received payment for their materials, labors or services to file a Claim of Lien against the project on which they worked or provided building materials. Thus, the “typical” general contractor, subcontractor, sub-subcontractor, material supplier typically have some type of lien rights; in addition, the Georgia Code allows others lien rights including foresters, land surveyors, and architects. For a more detailed listing of those entitled to file a lien in Georgia, please click here > >
What is the deadline for filing a lien in Georgia?
Unless the potential lien claimant has signed a valid Georgia lien waiver, then the lien must be filed within 90 days of the last day in which the lien claimant actually worked on the real estate. Be careful, as valid lien waivers can shorten this period to either (i) 90 days from the last day worked or (ii) 60 days from the date of the lien waiver whichever is shorter! If you want an easy way to calculate these deadlines, then please request our Georgia materialmen’s deadline calculator > >
How long do liens last in Georgia?
Unless a Notice of Contest of Lien is filed (usually by the owner of the project or the general contractor), Georgia’s liens expire one year from the date of filing. In order to prevent this automatic expiration of the claim of lien, the lien claimant must “perfect” prior to the lien’s expiration. There are several methods to perfecting a lien in Georgia, but the most common method is through filing a lawsuit to collect the money which you are owed.
Does filing a lien against someone’s property guarantee payment?
Although Georgia’s Mechanics and Materialmen’s Lien Act is a very useful tool for improving the odds that you will be paid, there are no guarantees; thus, we typically recommend using the full arsenal of collection tools at your disposal.
If filing liens for nonpayment is a collection tool, are there other tools which my company should consider using to prevent payment problems?
Absolutely! There is a wide array of tools for construction professionals to improve their collection rate. Needless to say, the starting point, for you is likely either strong credit practices and a good, written contract. In addition, many contractors and subcontractors fail to exercise due diligence to see their credit risks. In addition, other common tools for the construction industry include preliminary liens, notices of furnishing, payment bond claims, lien claims, affidavits of nonpayment, and claims against retainage amounts. For more information on some of these useful collection tools, please download our helpful manual for filing liens in Georgia by clicking here > >
Do you have another question for our lien and payment bond attorneys, if so, please contact us today to enforce your lien rights and increase your ability to get paid.
The Cobb Law Group is pleased to announce the publication of its latest handbook–the Georgia Material Supplier Collection Handbook! This long-overdue collection guide will help credit managers, business owners, and material owners collect the money they are owed on construction projects in Georgia by providing essential tips for filing and enforcing mechanics and materialman’s liens, payment bond claims and other issues related to construction commercial collections. It is particularly helpful for construction material suppliers who deliver building materials to project sites anywhere in Georgia.
To download your free copy of the Georgia Material Supplier’s Collection Handbook, please click here > >
What Does the Free Guide to Georgia Materialmen Law Cover?
Although its impossible to cover every aspect of Georgia law in a single volume, this free handbook provides useful summaries of Georgia law and practical tips for credit managers and business owners. The topics included in this guide for collections includes the following:
- Summary of Important Deadlines for Notices, Affidavits, Lien and Payment Bond Claims;
- Checklists for Credit Managers to Consider before they Open Accounts for New Customers;
- Georgia’s Statutory Notice Scheme (Does it apply to you?);
- Georgia’s Lien Waivers (including unconditional waivers vs. conditional waivers);
- Georgia’s Prompt Payment Act;
- Using Preliminary Liens in Georgia to Help You Collect;
- A Summary of Georgia’s Mechanics and Materialmen’s lien laws;
- The Basics of Payment Bond Claims (Claim Against the Surety);
- How to Handle your case in Magistrate Court (Georgia’s small claims court); and
- Post-Judgment Collection Tips
Who Needs a Copy of their Free Guide to Georgia Construction Collection Law?
Anyone who has supplied materials or preformed services or labor on a construction site in Georgia needs to read this great guide. Using this resource as a guild, it can help you prevent collection issues before they arise, and it can help you enforce your rights to file a construction lien or make a payment bond claim to recover the money they are owed including the following:
- Credit Managers;
- Credit Analysts;
- Business Owners;
- CFOs and Comptrollers;
- Manufacturers of Building Materials;
- Account Receivable professionals;
- Building Supply Companies such as electrical supply, roofing materials, truss and framing supply companies, irrigation and plumbing supply companies, and many, many others;
- Potential Lien Claimants;
- Potential Payment Bond Claimants;
- Anyone who is owed money on a Georgia construction project; and
- many others
What is Included in this Guide to Georgia Construction Lien Law?
We include a long list of potential deadlines which can mean the difference between getting paid for your services and not including the deadlines for the following:
- Filing of a Notice of Commencement by a General Contractor
- Notices to Owners and Notices to Contractors
- Affidavits of Nonpayment
- Georgia Preliminary Construction Liens
- Mechanics and Materialmen’s Liens
- Payment Bond Claims (Miller Act Claims)
- Lawsuit Filing Deadlines to Enforce Lien Rights
- Notice of Contest of Lien
- Bond Claim Lawsuits
- Notice of Action of Filing Suit
In addition, this free guide to commercial collections for the construction industry includes the following, practical checklist to help you improve your rate of recovery almost instantly:
- Items to Add to you Credit Application
- Useful (time-saving and cost-saving) Contract Terms
- Personal Guarantees
- Georgia’s Statutory Notice Scheme (Pre-construction Notices)
- Internal Accounting Procedure Summary
- Suppliers Obligations
- Practical Tips for Credit Managers
- Options if Lien Waiver is Signed but Payment is Not Received
- Checklist for Filing Preliminary Liens
- Important Considerations for Georgia’s Construction Liens
- Statutory Requirements for Mechanics Liens
- Payment Bonds Covering Public Works
- Payment Bonds Covering Private Works
- Litigation Tips
- Post-Judgment Collection Resources
- Construction Legal Services
Download Your Free Copy Today!
To get your own copy of this important resource on Georgia construction law, please click here > >
Order Your Free Printed Copy of this Handbook for Georgia Materialmen:
In addition to the free download, we are also giving away printed versions of the Georgia Material Supplier Collection Handbook (while supplies last). To request a copy of this great summary of Georgia’s lien and payment bond law, please send an email request to us at either firstname.lastname@example.org or through our contact us page. Please be sure to include the number of copies you want and a valid mailing address.
If you find this Guide to Georgia’s Mechanics and Materialmen’s Lien useful, then you may also want to schedule a specialized training session for your staff or professional organization. Our construction law attorneys have helped to educate credit departments and business owners all about their rights and obligations under Georgia’s lien laws. We have helped to train the credit departments of some of the largest building material suppliers in the country, and, when we train your employees, we will customize our presentation to your specific industry using your common credit scenarios. For more information on our training and lecturing opportunities, please click here > >
The American Bar Association’s Forum on Construction Law recently chose Georgia construction attorney, Mark Cobb, as an editor of a new book to be published. This book will be a practical, legal guide to the mechanics and materialmen’s lien law statutes of the fifty states; and, it’s purpose will be to provide attorneys (and others) with a “one-stop” resource for understanding and complying with each state’s specific lien requirements.
Mark was very pleased to selected as a co-editor of this important publication; last year, he was a co-author on another book published by the ABA Forum’s on Construction Subcontracting. Now, he gets to move into the seat of an editor and work with construction lawyers from all across the country.
The three editors, Julia Hunting, Stephen Gross, and Mark will be writing part of the material themselves; however, they will rely mostly on construction law professionals in each state to provide the bulk of the information. Mark will be a contributor on the chapter related to Georgia’s lien statutes as well as an editor of the overall publication. He will primarily work with the Atlantic states and New England states’ lien law chapters. In addition to the hard-copy publication, the editors intent to create an internet version which is likely to provide a more detailed summary of each state’s lien laws, access to state lien statutes, and a list of ABA Division 7 (Insurance, Surety & Liens) practitioners who participated in this ground-breaking project.
Mark is excited to be engaged with this new project where he can use his decades of lien and commercial construction collection experience to help make this publication useful to other construction attorneys. The editors hope to include information to make this guide an effective and useful practice tool for construction lawyers across the country.
Although this will be Mark’s first editorial debut with the American Bar Association, Mark has written and edited numerous articles including the recently released Georgia Construction Suppliers Lien Collection Handbook. Of course, Mark recognizes the challenges of working with so many authors and writing styles in order to create a cohesive, fundamental legal resource, but he believes that he is up to the challenge.
“It is an honor to be recognized by my colleagues for this position as it confirm the Cobb Law Group’s ability to garner respect among some of our nations leading construction law firms. In fact, the other two co-editors are from large, national construction law firms which underscores our abilities and our reputation for providing the finest legal services even thought we are a small, boutique firm,” states Mark.
Mark has been very active in the ABA’s Forum on the Construction Industry for many years; this particular publication is spearheaded by Division 7 which focus on Insurance, Surety and Lien law issues. The editors have already met and have begin putting together and outline of information to be included by the chapter authors as well as a schedule for deadlines. Examples of the in information which will be included for each state includes the following:
- Preliminary Notice Requirements
- Project Completion Issues
- Deadlines for Filing Liens (for Direct Contractors)
- Deadlines for Filing Liens (for those who lack privity)
- Time Limits for Enforcing Mechanic’s Liens
- Recording Deadlines for Pendency of Action
- Lien Dismissal/Expiration
“We trying to roll this 50-State Lien Law Summary out as soon as possible in order to make sure that it contains the most current, up-to-date information available” promised Mark. Needless to say, this publication will be a welcome addition to every construction lawyer’s legal library.
We are happy to announce that Mark Cobb will be speaking on creditors rights to a group of lumber and building supply owners at a roundtable forum sponsored by the Construction Suppliers Association (CSA) on Monday, November 10, 2014 and hosted by Fuller Building Supply Company.
Mark will be discussing several topics related to material suppliers and their rights under Georgia law including the following:
Credit Applications and Personal Guarantees: Mark will discuss the importance of gathering information from the very beginning of the credit process to make debt issues easier to collect in the future. Mark will offer tips on
- How to create a more thorough credit application
- How to get updates for your credit applications and personal guarantees
- Easy ways to verify the information on the credit application
- Personal Guarantees greatly increase the likelihood of recovery
- Terms and conditions can make it easier and less expensive if you have to collect bad debt
Georgia’s Statutory Construction Notice Scheme: Mark will lead the discussion on the advantages and disadvantages of the Georgia’s notice scheme including:
- Useful information found on the Notice of Commencement
- When to send a Notice to Owner/Notice to Contractors (Notice of Furnishing)
- Practical tips to make the process smoother
Georgia’s Lien Waivers: Mark will introduce the attendees to the only authorized forms (for interim and final lien waivers) as well as:
- Conditional waivers v. unconditional waivers
- Lien waivers potentially shorten the deadline for filing a Georgia materialmen’s lien
- What to do if you don’t receive payment within 60 days
- Georgia Affidavits of Nonpayment
Georgia Preliminary Liens: Mark will introduce the collection process by clarifying the following:
- The difference with preliminary liens and standard materialmen’s liens
- Who should file the preliminary lien
- When should a creditor use / file a preliminary lien
- When preliminary liens expire
Georgia Materialmen’s Lien Law: Because of the numerous advantages to creditors in Georgia who supply materials (or labor or services), Mark will give an in depth presentation on Georgia’s lien laws including the following:
- When to file a lien in Georgia?
- The deadline for filing a lien
- What amounts are lienable?
- The statutory requirements for filing a lien?
- How to enforce a lien?
- Why does lien enforcement usually take two law suits?
Collection Suits: Although many materialmen’s lien claims are resolved without have to enforce them, sometimes creditors must take the next step. Mark will discuss:
- When is Georgia Magistrate Court appropriate?
- Venue and jurisdiction
- Types of judgments (i.e., judgment liens)
- Lawsuits to foreclose a materialmen’s lien
- Other collection lawsuits (e.g., garnishment of wages, bank accounts, etc.)
Claims Against Public Works Projects: Since construction liens cannot be placed against publically owned projects (projects owned by the federal, state or local governments), Mark will discuss the basics of payment bond claims:
- Payment bonds covering private construction projects in Georgia
- Payment bond requirement under federal law
- Payment bond requirements under state law
- Deadlines for making payment bond claims for nonpayment
- The claims process for payment bond claims (surety claims)
- Suits to enforce payment under a payment bond
Mark Cobb is excited about speaking to Atlanta architects and engineers at a Construction Law continuing education seminar sponsored by HalfMoon Education. Mark is speaking on IMPROVING THE PROJECT OUTCOME WITH ACCURATE AND EFFECTIVE CONSTRUCTION CONTRACTING in which he will address the basics of general contract law, the unique aspects of construction contracts and how to avoid non-performance.
One aspect Mark will address are non-payment issues including the filing of a Claim of Lien against the project. Here is a sample of the summary of Georgia’s lien laws which he will present:
Who Can File A Lien?
∙ Architects and Engineers, Surveyors, Foresters
∙ Contractors in privity with the Owner
∙ Subcontractors in privity with the GC
∙ Sub-subcontractors and suppliers if they sent an NTO (and an NTO was required)
∙ Remember: if you do not have a required license, then you do not have the right to file a lien
Why File a Lien?
∙ To secure the money you are owed
∙ To make third parties responsible for the money you are owed (even though you didn’t contract with them)
∙ To apply pressure on those upstream who may be delaying payment
When Would you Consider Filing a Lien?
∙ When you are owed money
Important Things to Know About Liens:
∙ Lien Claimant must have substantially complied with the contract
∙ Lien is (generally) enforceable up to the amount of the improvements actually made
∙ Thanks to legislative efforts on behalf of the AGC Georgia, liens may be for full contract amounts
∙ Contractors who abandon project may not be entitled to file a lien (however, they may recover amount for partial performance under theory of quantum meruit)
∙ A Lien Claimant who ceases work after being told they are not going to be paid can file a lien
Filing Deadlines for Liens:
∙ 90 days from Last Day Worked or 60 days from date of Lien Waiver (whichever is shorter)
∙ Last Day Worked is NOT Invoice Date
∙ Lien must be perfected (“suit filed”) before the first anniversary of the filing of the lien
∙ Liens must be perfected within one year of the date on which they are filed, otherwise, they automatically expire
∙ Liens are perfected by (i) filing a lawsuit against the entity with whom you contracted and (ii) filing a Notice of Filing of Action to Perfect Lien with the clerk of court in the county where the project was located
∙ “Foreclosure” of Liens are generally an additional, separate step to perfecting liens. Unless there is jurisdictional alignment, a lien claimant must wait to seek foreclosure against the owner of the real estate until after they have received a judgment against the entity with whom they original contracted
In the big, legal field of “commercial collections” there is seldom good news. Even rarer, there is seldom a big benefit to help you get paid. Commercial collections for the construction industry, however, is different–there is some good news and there are some BIG, effective strategies to help you get paid . . . .
Introducing the Materialmen’s Lien (sometimes referred to as construction, subcontractor, contractor or mechanics lien) and/or the Payment Bond Claim!
What are the benefits to filing a Materialmen’s Lien in Georgia and/or making a claim against a Payment Bond? Although liens and payment bonds are completely separate animals with their own advantages and disadvantages, they share a BIG ADVANTAGE: for the subcontractor or the material supplier it is like getting a free GUARANTOR to promise to pay you the money you are owed after the money is owed! This is unthinkable in almost any other collection area. Look at this example:
OWNER hires ABC CONTRACTOR to build something; ABC CONTRACTOR, in turn, hires XYZ SUBCONTRACTOR to perform all of the electrical work on the project. Assuming that XYZ SUBCONTRACTOR fully performed under its contract, but ABC CONTRACTOR breaches its contract with XYZ SUBCONTRACTOR by failing to pay XYZ SUBCONTRACTOR, then, pursuant to standard contract theory (i.e., commercial collections), SYZ SUBCONTRACTOR may pursue collection of the debt from ABC CONTRACTOR (and only from ABC CONTRACTOR). But in the niche area of construction collection, in addition to seeking payment from the contractor, XYZ SUBCONTRACTOR may be able to file either a lien or make a payment bond claim in which case, XYZ SUBCONTRACTOR can look to either OWNER (in the case of a lien) and/or SURETY (in the case of a payment bond). Imagine someone owes you some money, and then after the debt becomes due, you find that a third-party may also be responsible for paying you.
Practical Tip: If you are a supplier or subcontractor who wants to improve your recovery of accounts receivables (AR), then, before you begin work or begin providing materials to the jobsite, try to obtain a personal guarantee from your customer’s owner. That way, if you are not paid, you may be able to seek recovery from (i) your customer such as ABC CONTRACTOR, (ii) your customer’s individual owner, (iii) by using a mechanics liens, the OWNER, and (iv) if there is a payment bond covering the project, then the SURETY. Four potential debtors/guarantors will significantly increase your likelihood of recovery.
Is It as Simple as It Seems? Unfortunately, nothing is entirely simple, but filing a claim of lien in Georgia and making payment bond claims are typically not too difficult nor too expensive. Of course, the lien claimant or the bond claimant must meet several obligations and deadlines in order to pursue their lien rights but most “good” subcontractors and suppliers do this automatically, and less “professional” subcontractors and suppliers, admittedly, seem to have more difficulties. We hope to address some of these issues in future blog posts as well.
What is the Difference Between a Claim of Lien and a Payment Bond Claim? On all privately-owned construction projects in Georgia, those who supply labor, services or materials have basic rights if they do not receive timely payment. On all public works projects (government-owned construction projects) of a certain size in Georgia, those who supply labor, services or materials have rights against the payment bonds. In addition, some private projects are also covered by Payment Bonds in which case, an unpaid subcontractor or supplier may file a construction lien and, concurrently, file a claim against the payment bond (which really increases the ability to recover your AR).
How Do I File a Construction Lien in Georgia? As mentioned briefly above, lien and bond claimants must meet various requirements in order to file a lien. Thus, it is vital to select a Georgia construction lawyer to help you analyze your specific matter and advise you on your collection options. It is important to know that lien and bond claims must be made within 90 days of the last day in which you worked or supplied materials on the project. (It could be a shorter period if you signed a statutorily authorized lien waiver).
It’s Up to You if you Want to Collect Your Money: If you are looking for a construction lawyer to help you file a materialmen’s lien (or make a claim against a payment bond) anywhere within the State of Georgia, please click here to contact us today.
After two years of hard work, we are pleased to announce that Construction Subcontracting: A Comprehensive Practical and Legal Guide has been published by the American Bar Association (“ABA”), and Mark Cobb is pleased to have been one of the contributors to this amazing new resource (and the only participating attorney from Georgia!)
Although this publication could be useful to many people including construction and credit professionals, it is a book written by subcontractor law attorneys primarily for other attorneys who need to know more about the subject. In some ways, it is intended to begin codifying and identifying those issues unique to specialty trade subcontractors and material suppliers as the new concept of SUBCONTRACTOR LAW becomes more and more recognized by legal professionals, educators, and construction industry professionals.
Construction Subcontracting: A Comprehensive Practical and Legal Guide was the brain-child of Division 9 of the ABA’s Forum on the Construction Industry. Founded in 1976, the Forum has grown to become the largest organization of construction lawyers in the world. It fulfills its mission of “Building the Best Construction Lawyers” and Forum members represent all segments of the industry, including owners, design professionals, contractors, construction managers, integrated design-builders, subcontractors, suppliers, insurers, and sureties. Division 9 is a sub-group of Forum member attorneys who represent and focus on the unique needs of specialty trade contractors and suppliers. The attorneys who are active in Division 9 recognized the lack of a national publication and guide in this burgeoning area of practice. This book remedies this in fulfilling its mission to be “comprehensive”, “practical” and “legal”. The three editors, each of whom are at the top of their profession, chose to divided the text into the following six parts:
- The Subcontract Document
- Subcontract Performance
- Insurance, Bonding, and Licensure
- Special Project Issues
- Other Contracting Arrangements
As you can imagine with a book of this caliber, each section is filled with multiple chapters dedicated to explaining the fundamentals of Subcontractor Law including contractual rights and obligations, Federal and state statutory provisions impacting subcontractors as well as common law issues and remedies affecting construction professionals.
Part One of the book discusses “The Subcontract Document” which includes an examination into subcontract terms commonly used in standard contract templates (such as AIA contracts, ConsensusDocs and others frequently used construction forms) as well as their advantages and disadvantages; this section tears apart the common subcontract terms including flow-down provisions, change orders, insurance, warranties, terminations, and lien waivers. In addition to these (and other) express contract provisions, the section also discusses implied subcontract terms such as covenant of good faith and fair dealing. This important section also addresses the formation of subcontracts from the bid process through final negotiations and includes topics such as Bid Shopping, Bid Padding, Promissory Estoppel Doctrine, Negotiation Strategies and Preparing Fall-Back Provisions.
Part Two discusses “Subcontract Performance” which looks at such diverse subjects as construction scheduling, excusable and non-excusable delays, acceleration and damages as well as tips regarding calculation of damages. This section of the book also includes chapters on payment issues, mechanics and construction liens, change orders and extras as well as issues related to differing site claims, asserting and proving the claims of subcontractors, as well as contract terminations. This lengthy section of the book concludes with the topics of Warranties in Construction Subcontracts (expressed and implied), an analysis of the Spearin Doctrine (i.e., the owner’s implied warranty), Indemnity and Federal Prevailing Wage Law and Project Labor Agreements including the Davis-Bacon Act, Contract Work Hours and Safety Standards Act, and The Copeland Anti-Kickback Act. (Stay tuned for a future blog post in which Mark will provide a detailed summary regarding his contributions to the chapter on Subcontractor payments.)
Part Three addresses the vital topic of “Insurance, Bonding, and Licensure” and includes a detailed analysis of the different types of insurance generally required of subcontractors including General Liability Insurance, Professional Liability Insurance, Builders Risk Insurance, Workers’ Compensation Insurance, Automobile Coverage as well as related issues such as waivers, endorsements and subrogation. This section also provides chapters on surety bond issues, Miller Act and “Little Miller Act”, payment bonds, performance bonds, and mechanics lien discharge bonds. Regarding subcontractor licensure, the book discusses the need for a licenses, the various governing boards and non-compliance with licensure requirements as well as the payment rights for unlicensed subcontractors.
Part Four attacks the difficult topic of “Disputes” including an analysis of typical subcontract provisions such as the Duty to Continue Work Pending a Dispute, Direct Discussion and Escalation; this part also looks at litigation pass-through claims discussing such vital topics as case management, discovery and joint defense agreements; in addition, it looks at alternate dispute resolution methods including mediation, arbitration and dispute avoidance.
Part Five’s “Special Project Issues” takes a look into several interesting and often-overlooked subjects including an analysis of Federal, State and Local Contracting (including discussion on competitive bidding, preference and incentive programs and bid protects); Alternative Project Delivery (such as design-build, Tri-Party Agreements, and Public-Private Partnerships); Green Building issues (including the LEEDS rating systems as well as others rating systems such as Earth Advantage, The Living Building Challenge, DGNB and others as well as the additional project risks associated with green building techniques); finally, this section addresses Globalization and International Projects whether led by foreign contractors working on projects in the United States or US contractors working abroad.
Section Six, the final section, addresses the cutting-edge topic of “Other Contracting Arrangements”, and it includes discussion on “newer” arrangements such as Subconsulting Design Contracts, Design Issues, Supply Contracts and Equipment Leases (including equipment rentals on construction projects), Teaming Arrangements such as joint-venture agreements along with their management, advantages and disadvantages including their role in the federal procurement context.
As you can see, this comprehensive publication is a long-overdue resource for those of us practicing in the field of subcontractor law. It is an amazing “first-step” as this new legal field is accepted and defined by the legal profession, legal educators and construction professionals. Mark Cobb was honoured and thrilled to have been a part of this seminal text in his field, and he greatly enjoyed the ability to work with some of the leading subcontractor law practitioners in the country.
If you are interested in more information regarding this subject or if you would like to obtain your own copy of Construction Subcontracting: A Comprehensive Practical and Legal Guide, then please contact us today. If you would like to purchase your own copy of this useful tool directly from the publisher, please click here > >
If you have provided labor, materials, equipment or other services on a construction project AND you have not received payment, then you may be entitled to file a lien under Georgia’s current lien laws. Determining who may file a lien and when a lien may be filed can be tricky, but filing the correct document and properly providing statutory notice can be even trickier!
The Sad Reality About Filing A Lien Yourself: Until you’ve dealt with Georgia’s lien statutes, many people think that “filing a lien is easy”. They think all that they need to do is fill-out a “lien form” and file it with the court. Unfortunately, that’s not true! There is no short-cut or no “one-size-fits-all” type of lien.
Because Georgia’s lien laws are strictly construed against the lien claimant, even one small mistake can invalidate a claim of lien; consequently, we highly recommend that you engage the services of a qualified Georgia construction attorney. In addition, because liens are clouds upon the title of the real estate against which they are filed, a lien claimant may be responsible for damages to the owner caused by an improper lien. Nonetheless, we believe that it is important that every construction professional has an understanding of the basic lien statutes. Thus, this article is intended to give you as thorough an understanding of Georgia’s mechanics and materialmen’s lien process as possible and will help you better understand your lien rights. Then, you’ll be more informed as to your legal rights and potential pitfalls as you seek an attorney to assist you.
WHO HAS A RIGHT TO FILE A CLAIM OF LIEN?
Not just anyone can file a lien for a past due invoice. Materialmen’s liens greatly improve a subcontractor’s or supplier’s odds of recovery, however, only certain parties providing certain services are entitled to file a lien for nonpayment. Generally speaking, prime contractors, specialty trade subcontractors, sub-subcontractors, and material suppliers who have provided services, labor or materials which have “improved” real estate are entitled to file a claim of lien. In addition, Georgia’s statutes allow architects, registered surveyors, engineers, and manufacturers of machines the right to file liens if they are not paid for their services. Others may also be allowed to file a lien in Georgia, and for more information on the specifics of O.C.G.A. Section 44-14-361, please click here > >
WERE YOU REQUIRED TO SEND A PRELIMINARY NOTICE?
Assuming that you are statutorily authorized to file a lien, you may (or may not!) have had a condition precedent in order to preserve your right to file a lien. If your contract is directly with the project owner, there is no requirement that a preliminary notice is required; if your contract is with the prime contractor, then a preliminary notice is not required. If your contract is with a subcontractor, then you are required to send a Notice to Owner/Notice to General Contractor within the first thirty (30) days that you begin working. These notices should be sent every time you contract with a subcontractor or supplier as they will PRESERVE your right to file a materialmen’s lien if necessary. Failure to timely send the preliminary notices may prevent you from having any lien rights (there are always exceptions, however, so please check with your attorney if you were unable to or failed to send a proper notice). For more information on Georgia’s statutory construction notice scheme, please click here > >
WHAT IS THE DEADLINE TO FILE A LIEN IN GEORGIA?
Even in you are entitled to file a Georgia construction lien, you must meet the deadline for filing a lien. Generally speaking, all liens in Georgia must be filed within 90 days of the last day in which work was actually performed on the jobsite (which is likely not the same day as the invoice date so don’t look at the invoice date in calculating the deadline!) If the potential lien claimant signed a Georgia statutory lien waiver form, then the time period in which a valid lien may be filed may be reduced to either (i) 90 days from the last day worked or (ii) 60 days from the date of the lien waiver–whichever is less!! Please remember that whoever prepares your Georgia lien will need some lead-time to perform the necessary research and prepare all of the proper documents and get it timely filed.
PREPARE YOUR GEORGIA MATERIALMEN’S LIEN:
Many lien claimants attempt to file their own liens as the online forms look “easy”; however, as you frequently find, you “get what you pay for”. The simple parts of the lien include proper identification of the lien claimant which may not be as obvious as you think (e.g., all liens should use a full, legal name such as “ABC SUBCONTRACTING, LLC”) and a description of the services or materials which were supplied. The more difficult aspects of the lien include proper identification of the owner of the real estate (Georgia’s county tax records frequently contain information only on former land owners!) and the legal description of the property to be liened. Generally, listing only a street address on a Georgia lien is not advisable. In fact, in most situations we recommend a limited title search to locate the correct property owner’s name, the metes-and-bounds legal description to the property, and to locate the vesting deed.
Also, Georgia’s lien laws require certain phrases on the lien; if these requirements are not met, then the lien will not be valid even if you do everything else right.
FILING LIENS IN GEORGIA:
We have 159 counties in our state, and your lien must be filed (before the deadline discussed above) in the county where the property to be liened is located. Liens are filed with the Clerk of the Superior Court in the county of the project’s location, and there will be a lien recording fee (which is fairly nominal–between $5 and $10 for the first page of the lien). In addition to filing the claim of lien, we typically suggest cross-referencing the lien to the real estate owner’s vesting document to help increase the odds that the lien will be “found” by those performing title searches.
SERVE NOTICE OF THE LIEN ON THE REAL PROPERTY OWNER:
Georgia’s lien laws require that the owner(s) of the liened real estate be given notice of the filing of the lien within 2 business days of the filing of the lien. We strongly recommend that notice of the filing of the materialmen’s lien be sent via certified mail (that way, you have proof of sending and proof of delivery).
ENFORCE YOUR MECHANIC’S LIEN:
Pursuant to Georgia law, your lien is valid for one year from the date of filing. This “year” gives many lien claimants the opportunity to settle or negotiate payment of their claims with limited attorney time or costs. If payment is not received within the year, however, then you must file a lawsuit against the person or entity with whom your contracted AND a Notice of Filing of Action must be filed within 30 days of the date your lawsuit is filed (and notice given to the owner of the liened property). If you prevail in your lawsuit, then your lien remains enforceable beyond the anniversary of the filing of the lien (this is frequently referred to as “perfecting your lien”). For more information on enforcing a Georgia lien, please click here > >
FORECLOSURE OF A GEORGIA MATERIALMEN’S LIEN:
After you prevail in a lawsuit against the entity which contracted with you for services, labor or material, then you can take the steps necessary to foreclose upon the lien. This gets very complicated, but unless you contract directly with the owner of the real estate, you will likely have to file a second lawsuit to institute foreclosure proceedings. Fortunately, Georgia liens are almost always resolved prior to institution of foreclosure proceedings, but if you find yourself with a valid lien without payment, then you have the option to foreclose the lien and force the sell of the real estate to pay your debt.
Georgia’s mechanics and materialmen’s liens laws are a very useful tool for enforcing payment for the work, materials or services provided by a contractor or a supplier; however, the rules governing the preparing and filing of liens are extremely tricky (we haven’t even discussed the exceptions in this overview!); if you have any questions regarding Georgia’s construction liens or subcontractor liens, please leave us a comment or contact us before your lien rights evaporate.