Before the weekend starts, we wanted to comment on the recent flurry of Georgia cases involving mechanics and construction liens. There have been multiple rulings, and I’m pleased to report that for the most part, they interpret Georgia’s lien laws in favor of material suppliers, subcontractors, and lien claimants!
In the next several posts, we’ll be giving you more details on at least four recent decisions affecting your ability to comply with Georgia’s Mechanics and Materialmen’s Statute. But, we are going to start with the one case which is not as favorable towards lien claimants as the other cases we will tell you about shortly.
You may remember from our blog post Some Bad News For Georgia Lien Claimants, that the Georgia Court of Appeals came down with a heavy hand regarding typographical errors contained in liens in the matter styled Handy Andy of Eastman, Inc. v. Evans. In that blog post, I expressed hope that the lien claimant would appeal the Court of Appeals ruling to the Georgia Supreme Court. They did! I am sad to say, however, that Georgia’s Supreme Court upheld the lower court’s ruling, and they found that the material supplier’s failure to strictly comply with the notice provision of materialman’s lien statute invalidated its claim of lien.
Regardless, this ruling is not as bad as it may seem at first blush.
In the written opinion of the Court of Appeals, the court seemed to place a great deal of emphasis on a typographical errors (see previous blog post for the factual background) which led them to the conclusion that typographical errors could be fatal to the enforcement of a supplier’s lien in Georgia. The Supreme Court, on the other hand, emphasized that the particular typographical error resulted in an incorrect notice to the real property owner. Thus, the Georgia Court did not say that any or all typographical errors could invalidate a mechanic’s lien; instead, it is the specific typographical mistake which might invalidate a lien.
In the Handy Andy case, the alleged typographical errors were contained in a statutorily mandated section. This section gives the owner of the real estate which is liened a notice about the applicable law. In fact, there were two such errors contained in this mandated section in the mechanics lien filed by Handy Andy. Thus, the Supreme Court found that Handy Andy’s lien as written gave the real estate owner misinformation regarding Georgia’s Lien Law. Since Handy Andy’s lien provided the owner with incorrect information, the court reasoned that the lien claimant (Handy Andy) did not “strictly comply” with the requirements for enforcing a materialmen’s lien in Georgia. The court went on to remind us all that, “Strict compliance with the materialman’s lien statutes is required because a materialman’s lien effectively permits the transfer of liability from the person who actually contracted with the materialman for materials to be used in improving real estate to the owner of the improved property, even though that property owner usually will have no relationship with the materialman, contractually or otherwise.”
Handy Andy lost its lien due to two errors contained in a very important part of the lien. Thus, it is incumbent on lien claimants to file their Georgia mechanics liens correctly. We cannot urge potential lien claimants to contact a Georgia construction law firm such as the Cobb Law Group to help them file a valid Claim of Lien.
Please leave your comments regarding the Georgia Supreme Court’s holding. Do you think it is fair?
Watch out for topographical errors in your Georgia liens!
There’s no way to say it, but we have some good news and some bad news for general contractors, suppliers, subcontractors and materialmen in Georgia. In the past month, two cases have been handed down by the Georgia Court of Appeals, and one of the cases has some bad news and the other case has some good news for Georgia’s lien claimants.
Typically, I think it’s a good idea to start with the bad news:
Every reader of this blog should know that anyone who files a materialmen or mechanic’s lien in Georgia must “strictly comply” with the Georgia lien statues. And, these statutes are precise and detailed, and we know that those who file liens are held to a very high standard. Recently, however, the case Handy Andy of Eastman, Inc. v. Evan, et. al. held “strict compliance” to an unbelievably high standard!
The facts are very simple, the Plaintiff (Handy Andy of Eastman, Inc.) supplied materials on a Georgia construction project; they were not paid, so they filed a supplier’s lien pursuant to the Georgia Mechanics and Materialmen’s Lien Statute. The lien, however, had to seemingly minor mistakes or typographical errors.
As we know, Georgia’s lien statute requires that any lien (filed after March 31, 2009), must contain the following notice in at least 12 point bold font: “This claim of lien expires and is void 395 days from the date of filing of the claim of lien if no notice of commencement of lien action is filed in that time period.” The failure to include this required language invalidates the lien. The materialmen’s lien filed by the Plaintiff included this phrase, but it differed in two respects:
First the Plaintiff’s lien said that the lien would be “void 365 days from the date . . . “ when it should have read that it would be “void 395 days from the date . . .”
Second, the Plaintiff’s lien omitted the word action so that it read that the lien expired “if no notice of commencement of lien” is filed within 365 days instead of “if no notice of commencement of lien action” is filed . . .
Although the Plaintiff argued that these changes were merely typographical errors and that the language in its liens not only substantially complied with the statute, but actually worked to the Defendant’s’ benefit, the Court of Appeals disagreed and held that the lien was invalid. This standard is extremely high, and if it becomes the precedent, liens may get invalidated to do the most trivial (and inevitable) human mistate. We can hope that the Plaintiff decides to appeal this matter to the Georgia Supreme Court, and trust that their decision will be more reasonable. Until then, you may ask, what are lien claimants supposed to do?
PRACTICAL TIP: Liens must be precise, it is very important that your liens do not contain any typographical errors!
Using the right Georgia lien forms is the first step to ensuring that your are on the right path to filing a claim of lien, but you must read and re-read the lien for accuracy in help improve the enforceability of your lien. Please contact the Cobb Law Group if you have any questions or need to file any materialmen’s liens anywhere in the State of Georgia.
Now the good news: You can almost stop reading as this blog entry has gone on too long. There is another case which includes some good news for lien claimants in Georgia, but I’m going to save that for next week’s blog!
Until then, I would like to hear your thoughts about this ruling!