The construction lawyers at the Cobb Law Group are pleased to announce that, starting today, clients may obtain the current Georgia Notice of Commencement form online through our Virtual Law Firm. It’s easy, it’s secure, and it helps project owners and general contractors keep track of the sub-subcontractors and material suppliers working on their construction projects. To access our online construction documents for Georgia including the Notice of Commencement, please click here > >
Options Offer Cost-Savings to Clients: Clients who have used our Virtual Law Firm in the past find that the “limited representation” offered by the site provides useful legal documents with excellent cost-saving opportunities. In addition to the already lower costs for Georgia legal documents offered through this site, we are pleased to offer two different options to our clients applicable to preparing and filing of the Georgia Notice of Commencement documents: One option allows the client to save even more money by doing some of the work themselves if they are willing to file their Notice of Commencement with the clerk of court (we provide the cover letter and instructions!). Using the alternate option, we will file the Notice of Commencement on behalf of our client and, after recording, upload a copy of the recorded notice.
Note on Legal Descriptions: A Notice of Commencement on a public works project does not have to include a legal description in order to be valid; however, a Notice of Commencement for a private project must include a metes-and-bounds legal description in order to be valid. Our Notice of Commencement services give our clients the option of either providing the legal description themselves, or they may purchase one through our website.
Remember, pursuant to Georgia’s Mechanics and Materialmen’s Lien Law, general contractors may file a Notice of Commencement on any projects in Georgia; if a valid Notice is filed, then third-tier subcontractors, laborers, and material suppliers must provide a Notice to Owner and a Notice to Contractor (sometimes called a Notice of Furnishing) within the first 30 days in which they begin working on the project or begin supplying materials to the job site. Filing a Notice of Commencement is a great way for prime contractors to (i) know who is working on the job, (ii) limit potential lien and/or payment bond claimants, and (iii) know from whom to request lien waivers prior to making payments. Please click here > > for our article on how Georgia general contractors can use Notices of Commencement to their advantage!
by: Mark A. Cobb
Although it is not a scientific representation, we get the sense from our contractor clients that the construction industry is picking up throughout Georgia. One measure that we use is the number of Notices of Commencement that we have been asked to prepare, and this number has steadily increased which, hopefully, means that more construction projects are starting this year!
In previous blog posts, we have discussed the technical requirements in order to have a valid Georgia Notice of Commencement before, but many contractors, project owners, project developers, and apartment complex managers think they need only meet the legal requirements. They forget that filing a Notice of Commencement at the start of each project is a very good idea as, properly used, it can limit (or even prevent) Claims of Lien being filed or payment bond claims being made against your project for nonpayment. And there are some very easy, useful steps the filer of the Notice of Commencement can take in order to better take advantage of the law.
The Purpose of the Notice of Commencement Scheme in Georgia: Before plunging into some practical tips for contractors working in Georgia, let’s review the purpose of the Notice of Commencement statutes. Historically, Georgia’s lien laws (and similarly Georgia’s law on payment bonds) allowed virtually anyone working on the project to be a potential lien or bond claimant. As projects were nearing the end, owners and General contractors were surprised to find that subcontractors which had been paid, had not, in turn, paid their sub-subcontractors, equipment suppliers, or materialmen. The projects were having materialmen’s liens filed and payment bond claims made frequently from companies that the owner or the GC did not know had been working on the project. Thus, Georgia adopted the statutory scheme for Notices of Commencement:
- How the Scheme Works if the GC / Owner files a Notice of Commencement: If the prime contractor, property owner, or project manager files a valid Notice of Commencement, then, in order to preserve lien rights in Georgia, all third tier parties (i.e., those NOT in privity of contract with either the general contractor or the property owner) must give a valid Notice to Owner and Notice to Contractor within 30 days of the first day in which they begin working on the project or begin supplying to the project. (Please note that Notices to Owners are frequently referred to as “NTOs” and Notices to Contractor are frequently called “NTCs”.)
- How the Scheme Works if the GC / Owner Does Not File a Notice of Commencement: If the general contractor, real estate owner or project manager chooses not to file a Notice of Commencement (or, if they file a Notice but it is deemed invalid), then no one on the job is required to give a Notice to Owner or a Notice to Contractor. It basically reverts to the old scheme where an unknown sub-subcontractor and virtually all suppliers have lien rights even if the owner or prime contractor does not know they are on the job.
How Can the Notice of Commencement Scheme Help GC’s and Owners? If properly used, Georgia’s notice requirements can be very helpful. Some of the advantages to property owners or contractors to file a proper Notice include the following:
- It lets you know who is working on your job site;
- If a third-tier party fails to provide an NTO/NTC, then they lose their lien and payment bond rights;
- You know from whom to require a Georgia lien waiver;
PRACTICAL TIPS FOR FILING A NOTICE OF COMMENCEMENT:
The mechanics lien lawyers at the Cobb Law Group have reviewed thousands of Notices of Commencements in Georgia, and we are constantly surprised that–while they may meet the technical requirements under Georgia law–they almost always fail to help the owner/general contractor with the practical application of these documents.
- TIP ONE: Include the Project Manager’s Name on the Notice: Third tier subcontractors and suppliers must send their NTOs to the address of the GC and the Owner as set forth in the Notice of Commencement. Virtually, everyone just lists their addresses without designating a proper employee to handle/review/log the notices. Thus, a proper NTO may end up (and stay on) the desk of a receptionist who doesn’t know where to send it. If you add the appropriate person’s name as an ATTENTION line (perhaps the project manager), then the proper NTO will be received and you’ll know from whom to require lien waivers;
- TIP TWO: Include a Specific Recipient at the Owner’s Office: Similarly, proper NTOs are sent to the owner of the real estate at the address set forth in the Notice of Commencement; even more frequently these remain on a receptionist’s desk and are not given to the person who will be responsible for checking to make sure that the general contractor has received all of its proper lien waivers from the lower-tier subs and suppliers;
- TIP THREE: List the Management Company or Construction Manager as a Third Party: Georgia’s Notice of Commencement form requires the name, if any, of a third party who is requesting the improvement to be made to the real estate if they are not the owner. Frequently, on apartment construction projects or apartment remodels, the apartment management company is the party requesting the work and in charge of making payments. If they are listed on the Notice of Commencement, then it will help them track payments and prevent construction lien and payment bond claims.
These three very easy, very practical tips turn the Georgia Notice of Commencement requirement into an advantage for contractors and owners; it allows you to effectively track the NTOs which are received so that you, in turn, can easily ensure that payments flows downstream to everyone working on the project. Instead of looking at the Notice of Commencement scheme as a burden or as a means for a subcontractor to preserve its lien rights, look at it as a means to limit materialmen’s liens and as a way to create a list of entities from whom to require executed lien waivers. Use Georgia’s statutory scheme to PREVENT problems not CAUSE problems.
If you need to file a Notice of Commencement anywhere in Georgia, the construction lawyers of the Cobb Law Group are able to help. We offer different types of Notice services depending upon your needs. To schedule our “traditional” legal services, please call us at 770-886-5890 or email us today. If you are familiar with Notices of Commencement, but you only need help preparing the document and filing it, please check out our virtual law firm where you can enter the information on-line and let us prepare the document for you! For more information on this service, please click here > >
Almost every day we receive questions about Georgia’s Notices to Owners and Notices to Contractors (“NTO”). One of the biggest pitfalls of sending out your own NTO, is that Georgia’s notice requirements mandate that information contained in the NTO must use information contained in the Notice of Commencement filed by the project’s general contractor.
For example, a supplier or subcontractor must send the Notice to Owner at the addresses contained in the Notice of Commencement. Thus, if the Notice of Commencement lists the job site as the address, but an NTO is sent to the GC’s main office address, your NTO may be defective! Similarly, if the project is commonly referred to as “ABC Project” and you used that description in your NTO, but the Notice of Commencement calls it “Super Big ABC Project # 292929″, then your NTO may be defective. Of course, we all know that a defective NTO may prevent your from filing a Mechanic’s Lien in Georgia, making a claim against the payment bond, etc. This means lost revenues for your company.
One question we get is “How do I obtain a copy of the Notice of Commencement filed by a general contractor in Georgia?”
Now, the Cobb Law Group’s Virtual Construction Law Firm can help you with this. We have just added the forms which our client’s can use to obtain copies of the Notice of Commencement on private projects, State of Georgia construction projects, and local government projects in Georgia.
To find these forms and other useful documents, click on Cobb Law Group Virtual Law Firm;
To learn more about our unbundled legal services, click here;
To access our online construction documents for Georgia including the Notice of Commencement, please click here > >
Please try our out online legal forms and let us know what you think!
As you are aware, Georgia’s lien statutes require that third tier suppliers and subcontractors (those not in privity of contract with either the general contractor or the owner) file Notices to Owners IF the general contractor or the project owner filed a Notice of Commencement. Furthermore, according to the Georgia statutes, the Notice of Commencement must be filed within fifteen (15) of the commencement of the project. The Georgia Code also states, “The failure to file a Notice of Commencement shall render the provisions of this Code section inapplicable.”
So, what happens when the Notice of Commencement is not filed within fifteen days?
In a recent court of appeals decision (Southeast Culvert, Inc. v. Hardin Bros., LLC), the Georgia Court of Appeals gave general contractors some guidance on this question. In the case, the general contractor had filed its Notice of Commencement approximately 23 days after commencing work on the project; thus, the lien claimant argued that (i) because the GC filed its lien more than fifteen days after beginning work, (ii) the Notice of Commencement was not valid, and (iii) suppliers and subcontractors do not have an obligation to file a Notice to Owner is the Notice of Commencement is not valid.
The Georgia Court of Appeals did not agree with this reasoning; instead, it held that an eight-day delay in filing the Notice of Commencement did not relieve the lien claimant of its obligation to provide a Notice to Contractor. The court reasoned that neither party disputed that a Notice of Commencement had been filed–it was disputed whether the delay in filing the Notice of Commencement invalidated the supplier’s obligation to send an NTO. The court held that the code section which states “The failure to file a Notice of Commencement shall render the provisions of this Code section inapplicable…” was not applicable to this case. The Court reasoned that this code section applies only when there has been a total failure to file a Notice of Commencement at the time when a materialman must give a written Notice to Contractor to perfect its lien. There was no such total failure to file a Notice of Commencement here, merely an untimely filing.
We would love to hear whether you think this is a wise decision so please leave a comment below! If you have any questions, please do not hesitate to contact us.
We are always on the lookout for cases which affect our clients’ right to file materialmen’s liens; last week, the Georgia Court of Appeals handed down a decision that allows general contractors a little leeway with getting their Notices of Commencement correct.
Basically, the fact of the case are very common: a supplier to a subcontractor was not paid on a construction project so the supplier filed a Georgia Materialmen’s Lien for the amount due. They sued the subcontractor and prevailed; however, the subcontractor was unable to pay the debt, so the supplier looked to the supplier’s lien which it had filed to pay the debt.
The Real Property Owner’s Argument: Unfortunately, the supplier had not sent out it’s Notice to Owner or Notice to Contractor (hereinafter “NTO”) which, as we know from other blog entries, is essential for all third tier subcontractors and suppliers. Thus, the owner of the property showed the court that (i) it had timely filed a Notice of Commencement, (ii) the supplier failed to send an NTO, and (iii) consequently, the supplier’s lien was invalid.
The Supplier’s Argument: The supplier acknowledged that when a Notice of Commencement is filed, all third tier suppliers and subcontractors must send an NTO within 30 days of beginning to work on the project in order to preserve their lien rights. However, as the supplier pointed out there is an exception to this requirement for an NTO: if the Notice of Commencement was not proper, then there is no obligation to send an NTO. In this particular case, the supplier argued that the Notice of Commencement failed to include the general contractor’s telephone number (which is statutorily required).
The Court’s Decision: The Georgia Court of Appeals noted a fundamental principal of Georgia’s mechanic’s and materialmen’s lien laws–that lien statutes in derogation of the common law must be strictly construed in favor of the property owner and against the materialman. The court then discussed the difference between absolute compliance and “substantial” compliance. The court, thus, comes to the conclusion that the Notice of Commencement which contained all the necessary information except for the general contractor’s telephone number substantially complied with the lien statutes. Therefore, the court reasoned, the Notice of Commencement was valid, and the supplier’s failure to send the Notice to Owner invalidated the mechanic’s lien.
Some good news for suppliers in Georgia: On a brighter note, the court underscored the difference between information which was vital to the success of the Notice of Commencement such as the owner’s information or the real property description and the missing telephone number.
Please let us know your opinion regarding the Georgia’s Court of Appeal’s interpretation of the Georgia lien statutes!
by Mark A. Cobb
As you know, we started the Georgia Construction, Lien and Payment Bond Law Blog in 2010, and as the year draws to a close we are grateful for our many readers and clients. Needless to say, the holidays are a very busy time of the year; unfortunately, we might allow our hectic schedule to be the cause for forgetting important deadlines. Thus, we thought we take a few minutes to remind you that certain materialman lien and payment bond deadlines may run out on you despite the holidays. Please take a few minutes to review your current accounts receivable, your construction contracts, your delivery tickets and make sure that no deadlines are missed–it can make the difference between marking an account “PAID IN FULL” or “WRITE-OFF”.
Here are some Georgia construction law statutes of limitations which you may find useful:
- Notice of Commencements: In Georgia, a Notice of Commencement should be filed within 15 days of the start of a construction project by the general contractor or the project owner;
- Request for a Copy of a Notice of Commencement: If an owner or a general contractor received a request for a copy of a Notice of Commencement covering a particular job, a copy must be given to the requesting partying within 10 days of the receipt of the request;
- Notice to Owner & Notice to Contractor: Third-tier subcontractors and suppliers must give Notice to Owner/Contractor within 30 days of the first day in which they are on the job or begin supplying materials to the job-site;
- Preliminary Liens: Georgia’s lien laws require that preliminary lien or pre-liens must be filed within 30 days of the first day in which you start on the job or begin supplying materials to the job-site;
- Georgia Mechanics, Materialmen and Construction Liens: Unless the deadline is shortened because the lien claimant signed a lien wavier, Georgia materialmen’s lien must be filed within 90 days of the last day in which the lien claimant was on the job or last supplied materials to the job-site;
- Payment Bond Claims: Unless the deadline is shortened because the payment bond claimant signed a lien waiver, claims made against payment bonds must be sent within 90 days of the last day in which the claimant worked on the job or last supplied materials to the job-site;
- Lawsuit to Perfect a Materialmen’s Lien: Georgia liens must be perfected before they automatically expire; in order to perfect the lien, a lawsuit must be filed within 1 year of the date in which the lien was filed against the party with whom the Georgia lien claimant contracted;
- Lawsuit on a Bond Claim: Depending on the type of the payment bond, the deadline to file a lawsuit on a bond claim may be as short as 6 months from the date the claim was made; there are many different types of potential payment bonds including federal payment bonds required under the Miller Act, state of Georgia or Georgia municipality payment bonds, and private payment bonds and different requirements apply to each type of bond;
- Notice of Action of Filing Suit: As part of the process to perfect a Georgia lien, a Notice of Action must be filed in the real estate records within 30 days of filing a lawsuit to perfect the mechanic/materialmen/construction lien; and
- Affidavit of Nonpayment: If a Georgia interim or final lien waiver and release is signed but payment is not received, the entity executing the lien waiver must file an Affidavit of Nonpayment with the clerk of court within 60 days of the date of the lien waiver or release in order to maintain its lien and/or bond rights.
There are just a few of the many deadlines that may affect you. Please contact us if you have questions regarding these or other deadlines or call us at 1-866-960-9539. Although it’s the holidays, our offices will be open the week between Christmas and New Years Eve. Merry Christmas!!
Georgia Court of Appeals Requires Strict Compliance of Supplier’s Notice to Owner/Notice to Contractor
Last month, the Georgia Court of Appeals handed down a decision that affects every third-tier subcontractor and supplier working on construction projects in Georgia. In short, the court held that a supplier’s Notice to Owner/Notice to Contractor which failed to include the subcontractor’s address and the location of the project did not comply with statutory requirements of a Notice to Owner. Thus, the supplier’s Notice was defective, and the supplier was barred from seeking payment under a payment bond and barred from filing a materialmen’s lien even though the contractor and surety had actual knowledge of subcontractor’s address and location of project. See Consolidated Pipe & Supply Co., Inc. v. Genoa Const. Services, Inc., — S.E.2d —-, 2010 (WL 447011) Ga.App.,2010.
Thus, in order for a sub-contractor or supplier to preserve its right to file a materialmen’s lien or make a claim against a payment bond, it is essential that a proper Notice to Contractor and a proper Notice to Owner is given within thirty (30) days of the date the sub-contractor or supplier begins work on the project.