Notices of Intent to Lien documents can be confusing to subcontractors and material suppliers; particularly those who work in–or supply to–projects in multiple states. That’s primarily because these Notices of Intent to File Liens are only required in certain states and most states only require preliminary notice. A notice of intent to lien is very similar to a demand letter, and it essentially is a document that is sent to certain primary contractors or parties on a construction project that warns the particular party that the claimant has the intent to file a mechanics lien or bond claim if their due payment is not made in a timely manner.
It’s important to be able to distinguish the difference between preliminary notice and notice of intent to lien because they are drastically different. Typically, a preliminary notice is something that a company sends to a contractor within 30 days or so of when the work begins, but a notice of intent to lien is a document that can only be sent after the work has been officially completed and there is an outstanding payment obligation.
The big question is should you send a notice of intent to lien, even if you aren’t required to do so? In short, the answer is yes, but you also must be aware of certain stipulations that go along with a notice of intent to lien before you go about delivering one, because they can backfire if you aren’t careful. In many situations, a notice of intent to lien can be enough to nudge certain parties to pay your claim, and it can be much less dramatic and expensive than directly filing a mechanics lien or bond claim. Also, it alleviates any threat for claiming a slander of title.
There are many instances in which a notice of intent to lien is not enough. However, it can still be worth the effort to send the notice of intent to lien document to at least try to settle the payment dispute before taking more serious measures.
Georgia’s Mechanics and Materialmen’s Lien Act, for example, does not require that a Notice of Intent to Lien be filed; nonetheless, these documents can be useful–if you choose to use one, however, please remember that they do not extend the deadline to file a lien. If you’re in a state that requires a notice of intent to lien and your deadline is only a couple weeks away then you have to squeeze it in quickly, and if your state (e.g., Georgia) does not require the notice of intent to lien then many times it’s not worth the risk of sending and then missing the deadline. In this instance, you should go straight to filing your mechanics lien or bond claim.
A notice of intent to lien could lead to some people promising your payment in the future, but that of course doesn’t mean anything when it comes to your mechanics lien deadlines. In a nutshell, you can be duped out of your money if you don’t keep your deadlines in mind when sending a notice of intent to lien.
There are several different kinds of liens, but two of the most commonly used liens include mechanic and property liens which, in Georgia, are primarily called Materialmen’s Liens, and they essentially are the same kind of notice or public record that aims to retrieve money that is owed to a specific party.
A common example of a mechanic’s lien is when a supplier who provides a sheet-rock for a commercial remodeling project who is not paid by the general contractor, which then leads to a lien document being placed against the project to recover the money. Most people don’t realize that even when a general contractor has been paid the subcontractors may still be allowed to seek payment from the project through a foreclosure action if the general contractor did not pay the subcontractor.
So essentially a lien is a notice that becomes attached to a property, either real or personal, that tells the world that another party claims that you owe them money. It’s kind of like a Scarlet Letter for construction law, and it’s of course something that should always be taken very seriously no matter the circumstances.
It may seem unfair that a property owner would have to pay a subcontractor because of a general contractor’s reckless and irresponsible behavior, but the rationale in the law for allowing mechanic’s liens in general is that between the party with the improved property and the supplier of the hypothetical marble bath tub it is the supplier’s need to be compensated that is greatest.
No matter what perspective you look at, a lien it’s definitely a very messy part of construction law, and it can be very unexpected without a notice of intent to lien being issued prior to the filing of the lien.
In Georgia, preliminary notices are the starting point for all mechanic’s liens processes, and subcontractors and suppliers must send a preliminary notice in order to protect their ability to eventually file a lien.
Although there are exceptions, it is adviseable to send Notices to Owners and Notices to Contractors on most Georgia construction projects. Sub-subcontractors and suppliers should send a preliminary notice in order to preserve a lien claim in the case that the sub-subcontractor or material supplier is not paid as the project progresses. In Georgia these notices are sometimes referred to as a ‘Notice to Owner’ or ‘Notice to Contractor’.
It’s important to keep in mind that a Notice of Commencement, which identifies what exactly will be done on a specific project prior to the actual work, is very important with preliminary notices in Georgia. A certain party who is not contracted directly with the owner of a property (subcontract work) is required to use a preliminary notice if a Notice of Commencement is filed. If a Notice of Commencement is not filed then the lien claimants must file a Preliminary Notice of Lien, which is very similar to a Notice of Intent to Lien.
]]>by Brianna Cook
While many bills were passed and many were not, the Senate did not reach unanimity regarding Georgia Senate Bill 171—a bill relating to mechanics and materialmen liens, to provide that such liens may attach to the usufruct interest of properties owned by or titled in a development authority or downtown development authority. The bill was subject of a study committee last summer, and would have established lien rights for construction providers on development authority projects. As mentioned previously, conference committees within the House and Senate receive bills and hash out any differences between the House and Senate versions of the bill. SB 171 was referred to the Economic Development and Tourism Senate Committee. These members have “general jurisdiction over economic development, business, trade, and any proposed measures that will affect the presence of tourism throughout the state.” Among the bills sponsors include Rep. Max Burns (23rd District), Rep. Steve Gooch (51st District), Rep. Michael Rhett (33rd District), Elena Parent (42nd District), and Rep. Clint Dixon (45th District).
SB 171 made it out of committee, but unfortunately was short lived, as it was tabled due to some last-minute opposition and concerns from local development authorities. In this instance, bills may be reported, with or without amendment, or tabled, which means no further action on it will occur. Tabling effectively “kills” the measure. If the committee has approved extensive amendments, they may decide to report a new bill incorporating all the amendments. In other words, the bill is dead, but it may return for a vote. When a pending matter is tabled correctly, it is set aside with no provision for bringing it back at any specific time. While the bill may not be moving forward, AGC understands the paramount of importance and has committed to revisit the issue in the future.
The Georgia General Assembly stands as one of the largest state legislatures in the nation. Comprised of the House of Representatives and the Senate, the Georgia General Assembly meets from January until late March to set the state’s annual budget, as well as propose laws on a variety of topics. Monday, March 6th, marked the 28th legislative day of the Senate’s 40-day session. The 28th day, known as none other than “Crossover Day,” is the Georgia General Assembly’s deadline for most bills to be passed by either the House or the Senate before becoming new laws by when the legislative session ends on March 29th. According to Mark Woodall, Associated General Contractor’s of Georgia’s (AGC) Director of Governmental Affairs, approximately 50+ bills were passed out of both the House and the Senate this night. Needless to say, there was a great bit of hustle and bustle at the Capitol and more expansion to come.
In the House, a bill is introduced when it is dropped in the hopper (a wooden box on the House floor). Meanwhile, in the Senate, the bill is submitted to clerks on the Senate floor. Upon introduction, the bill will receive a designation based on the chamber of introduction. Joint resolutions are designated H.J. Res, for House-originated bills, or S.J. Res., for Senate-originated bills, and are followed by a number, which is typically the next number available in sequence during that two-year Congress. Like a bill, a joint resolution requires the approval of both Chambers in identical form and the president’s signature to become law. In the House only, on the next legislative day, the House Clerk reads the bill’s title in chamber, although the actual bill is now assigned to a committee. In the Senate, the second reading before the entire chamber comes after a bill receives a favorable report from the committee to which it has been assigned. If a bill is reported favorably by committee, it is returned to the Clerk or Secretary who prepares a General Calendar of bills that have been favorably reported from the committee. The Senate does not have its second reading until after the bill passes through the committee. That means in the Senate, bills that do not pass the committee do not get a second reading. A simple majority (51 of 100) passes the bill. Finally, a conference committee made of House and Senate members works out any differences between the House and Senate versions of the bill. The resulting bill returns to the House and Senate for final approval.
]]>Representative Matthew Gambill of the 15th District from Cartersville has introduced Georgia Hour Bill 1221 in the current 2022 legislative session. This bill purports to change O.C.G.A. § 44-14-361.1 relating to how liens are declared, created, recorded for lien claimaint with an amount due of $10,000.00 or less. It also includes additional documentation as a part of the Claim of Lien for these lien claimants.
Specifically, HB 1221 adds paragraph 44-14-361.1(a)(2)(B) to the existing lien statute. This proposed addition includes the following language:
(B) In addition to the requirements set forth in subparagraph (A) of this paragraph, any lien filed with the clerk of the superior court by a lien claimant in the amount of $10,000.00 or less shall include a copy of the contract on which the claim is based and a copy of a letter demanding payment be sent by registered or certified mail or statutory overnight delivery by the claimant to the owner of the property or, if the owner’s address cannot be found, to the contractor, as the agent of the owner; provided, however, that if the property owner is an entity on file with the Secretary of State’s Corporations Division, sending a copy of the claim of lien to the entity’s address or the registered agent’s address shall satisfy this requirement;
The addition of this paragraph requires that those lien claimants with a claim of lien of $10,000.00 or less shall follow different procedures and requirements than liens in larger amounts. (This does not appear to have any limitation on the contract amount on the construction project; instead, it goes to the amount due claimed by the lien claimant.)
Prior Demand Will Have to be Sent to Owner Prior to Filing Materialmen’s Lien: Georgia HB 1221 requires that prior to filing any mechanics or materialmen’s lien over $10,000.00, the lien claimant must comply with the following requirements:
Materialmen’s Liens Must Include Additional Documents: Currently, Georgia’s Lien Law have a relatively simple procedure that applies to all construction liens filed in the state. HB 1221 would require that, in addition to the Claim of Lien, liens that claim an amount due of $10,000.00 or less shall also attach to the lien and publicly record the following:
HB 1221 Potentially Amends the Rights and Obligation for Contractors and Subcontractors:
If HB 1221 amends Georgia’s current lien law, then it will potentially alter the lien rights of contractors and subcontractors who are owed $10,000.00 or less. For example, it appears as though written contracts will be required for all of these small claims (incidentally, HB 1221 does not address change orders which may be less than $10,000.00). Thus, verbal contracts for claims $10,000.00 and under will not be enforceable through the lien mechanism.
Currently, all materialmen’s liens in Georgia must be filed within ninety (90) days of the last day in which the lien claimant worked on the project. HB 1221 effectively shortens this period: under the current law, filing liens are a one-step process which must be completed by the 89th day from the last day worked; HW 1221 would impose a two-step process which, would require a lien claimant to begin the lien filing process earlier in order to timely prepare and send a demand letter.
We intend to keep our client and friends up-to-date on the proposed HB 1221; if you wish to follow the bill as it moves through the Georgia legislature, please click here – – >>
How to Make Your Voice Heard:
It does not matter whether you are in favor of the proposed changes of HB 1221 or whether you oppose them, your opinion and experience matters. This is an ideal opportunity to contact your state legislators and senators to share your thoughts and opinions. If you do not know whom to contact, please click here – >>
]]>With over 25 years of experience with construction law, Mark Cobb is proud to be an author of the newest construction publication of the American Bar Associations’ Forum on Construction Law. It’s entitled Construction Checklists, Second Edition: A Guide To Frequently Encountered Construction Issues, it is edited by fellow construction attorneys Carrie L. Okizaki, Terrence L Brookie, Eric A. Berg, and Misty Hubbard Gutierrez.
The book is a compendium of checklists intended to be used by contractors, subcontractors, and suppliers as well as attorneys, accountants, and design professionals when approaching a legal matter. Each chapter includes an introduction for its purpose and a checklist of important considerations on that particular topic. Mark’s participation in the book centered around two particular chapters of the book.
Mark authored a new chapter for the second edition of this book dealing with a general contractors considerations in subcontract agreements; it includes a very detailed list of points a prime contractor should think about when engaging a subcontract (and drafting the contract). This chapter is further described in the preamble to the chapter as follows:
Subcontracts between subcontractors and contractors are frequently meant to be interpreted in conjunction with the prime contract. This checklist focuses on drafting the terms of the subcontract and provides guidance as to issues for contractors to address or consider in subcontracts, along with tips on tailoring a subcontract to meet the contractor’s needs.
The Construction Checklist books is a brand new edition of a previous publication originally issued in 2008; thus, in addition to the new content, all of the original content has been thoroughly revised and updated by nationally recognized construction attorneys who are active in the forum. Thus, in addition to Mark’s contribution of the new content on general contractors and their subcontracts, Mark also updated and revised a chapter from the previous Construction Checklist book entitled “Payment Security for the Contractor” which addresses another important topic for anyone involved in a construction project:
The following considerations apply to anyone providing labor or materials to a construction project, whether the prime contractor, subcontractors (of any tier), or suppliers. Because the contractor’s right to payment is measured by its performance, a contractor must consider carefully the criteria that it must satisfy before the owner has the obligation to make payment. Generally speaking, it is in the con-tractor’s interest to reduce or, if possible, eliminate the conditions it must satisfy before it is entitled to receive payment.
This wonderful new book is intended to address a wide variety of legal issues from very common issues to rarer, project-specific issues which occasionally occur. Checklists are invaluable to construction lawyers as they provide a quick reference tool for drafting and negotiating construction contracts, preparing for litigation, and advising clients. The Forum on the Construction Industry is a group of some of the countries top construction attorneys, and this book reflects the expertise of this esteemed membership. This new edition contains more than 70 checklists including more than 25 new additions since the 2008 previous edition. Each checklist has been developed to solve a practical need. Checklist topics include the following:
Copies of this book may be purchased by visiting the American Bar Association’s website by clicking here.
]]>by Mark A. Cobb
As we continue to celebrate 2022, many of us have left-over to-do lists from the prior year. This week is the best week, to review those lists, toss some of them, and use others to create a plan to improve your businesses profitability and efficiency! As construction attorneys focusing on the business needs of our clients, we have some experience suggesting improvements for our clients’ business, so let us help you put together some resolutions for the construction professional!
It does not matter whether you are project developer, a general contractor, or a subcontractor, your construction contracts need to be reviewed and updated. In fact, this may be the single, biggest obstacle to having a more profitable construction company. There are things which anyone can do themselves to improve their contracts (and we encourage this); but other items may need professional advice. This may take a little bit more planning, but an improved contract can lower the high-stakes risks of the modern construction project, it can mitigate damages in the event that the project does not go as smoothly as anticipated, and good contracts can even be used incentivize savings on a construction project (creating a win-win scenario for the project participants). Some common provision to review include the following:
Prior to entering into any contract, it is wise for the parties to confirm the track-record of the other parties; thus, every owner and every contractor should develop and implement a thorough due diligence system for vetting new relationships. Items which should be considered may include the following:
When a mole-hill becomes a mountain, it is likely too late to make all the necessary corrections needed for a successful project; however, if your employees understand the need for identifying–and, more importantly professionally addressing–problems early, then these issues may be generally avoided. Things to think when creating this year’s to-do may include the following:
Construction margins are slim, and almost everyone in the industry requires a consistent cash-flow in order to survive. Nonetheless, payment issues arise on every scale of project, and they can cause a construction company to close its doors if they are not resolved in a timely manner. Some things to consider for the new year include training staff to help reduce the amount of interruptions to your cash-flow by considering some of the following items:
Employees generally appreciate training that help them do their job better. Today, there are many mediums through which employees can be better trained at low-to-no costs. Our construction lawyers, for example, regularly provide live training to employees, but we also have training webinars on construction law available online which include such topics as
In addition, we also offer a free down-load of a 28-page Basic Introduction to Georgia Construction Law. (And, if you contact us, we will be glad to send you professionally printed copies of the handbook).
Take the first week of January to brain-storm how your can make your construction business more profitable and your employees more efficient. Consider our suggestions for your New Year’s resolutions, and then take the time to make the improvements which you have identified so that 2022 will be a great year for your company and the construction professionals with which you work.
]]>Recently, the Georgia Court of Appeals handed down a decision which should be a wake-up call for all unlicensed contractors doing business in the State of Georgia. In Saks Management and Associates, LLC v. Sung General Contracting, Inc., the court determined that an unlicensed general contractor is unable to enforce its contract rights.
The case deals with a conflict arising between an owner and a general contractor on a construction project. In July 2016, Saks Management and Associates LLC (“Saks”), the owner of an apartment complex in Atlanta, and Sung General Contracting, Inc (“Sung Contracting”), the general contractor entered into a contract for some remodeling work on a Saks-owned complex. The substantial completion of the work was scheduled by March 31, 2017. However, at the time the contract was executed, neither Sung Contracting nor its sole owner, Chol Chung, had obtained a valid general contractor license to work in the State of Georgia.
In August 2016, the city of Atlanta ordered a stop-work notice on the Project because the required permits had not been issued to commence work. At that time, Sung Contracting contracted a professional engineer and licensed general contractor named Sung Chung to obtain the permits. (Chol Chung was also known as Sung Chung, however the professional engineer was a different person.) It was claimed that this information was not given to Saks.
On February 1, 2017, Sung Contracting demanded an out-of-schedule, full payment by February 3 or, it threatened, that it would stop work on the Project. Saks agreed to pay $200,000.00 at that time, and both parties agreed to accelerate the date of completion to February 28. Sung Contracting did not finish the work under the accelerated construction schedule and continued working on the project until March 24 when Saks decided to terminate the contract for the construction delays.
Saks subsequently filed a lawsuit against Sung Contracting, it’s principal Chol Chung, and the professional engineer for breach of contract, negligence, conversion, unjust enrichment and fraud. Sung Contracting, in turn, filed counterclaims for breach of contract, quantum meruit and unjust enrichment, among other things. Both parties filed Motions for Summary Judgment asking to Court to rule in its favor on the basis of law (as the facts were not in dispute). The trial Court denied the petitions for summary judgment and both parties appealed to the Georgia Court of Appeals.
Saks argued that the statutory requirements to obtain a general contractor license precluded Sung Contracting from bringing any of its claims. Specifically, OCGA § 43-41-17 (a) provides as follows:
that no person shall have the right to engage in the business of general contracting without a current, valid general contractor license issued by the State Licensing Board for Residential and General Contractors.
In addition, OCGA § 43-41-17 (b) provides:
As a matter of public policy, any contract entered into on or after July 1, 2008, for the performance of work for which a residential contractor or general contractor license is required by this chapter and not otherwise exempted under this chapter and which is between an owner and a contractor who does not have a valid and current license required for such work in accordance with this chapter shall be unenforceable in law or in equity by the unlicensed contractor. For purposes of this subsection, a contractor shall be considered unlicensed only if the contractor was unlicensed on the effective date of the original contract for the work, if stated therein, or, if not stated, the date the last party to the contract executed such contract, if stated therein. . . . . This subsection shall not affect the rights of parties other than the unlicensed contractor to enforce contract, lien, or bond remedies. . . .
To counter the owner’s argument, Sung Contracting argued that a the repair rule exemption applied to this case. Specifically, Sung Contracting relied upon OCGA § 43-41-17 (g) which states as follows:
Nothing in this chapter shall preclude a person from offering or contracting to perform or undertaking or performing for an owner repair work, provided that the person performing the repair work discloses to the owner that such person does not hold a license under this chapter and provided, further, that such work does not affect the structural integrity of the real property. The board shall by rule or regulation further define the term “repair” as used in this subsection and any other necessary terms as to the scope of this exemption.
Furthermore, the State Licensing Board for Residential and General Contractors has enacted a repair rule that defines “repair” “to mean fixing, mending, maintenance, replacement or restoring of a part or portions of real property to good condition. Ga. Comp. R. & Regs. r. 553-8-.01
Sung Contracting claimed that it disclosed to Saks that it did not hold a general contractor license in Georgia and argued that the work did not impact any structural alteration that affected the integrity of the property; thus, Sung Contracting did not have to obtain a Georgia contractor’s license before performing the work on the Project.
The Court of Appeals considered that there was no evidence that Sung Contracting disclosed in writing its lack of license as general contractor which is a prerequisite to the application of the repair rule exemption. Also, the Court held that since “the statewide licensing system for general contractors was enacted for the interest of the public … [S]o the contract between Sung General Contracting and Saks is void, at least as far as Sung General Contracting’s right to enforce it in law or in equity”. Saks Mgmt. & Assocs., LLC. v. Sung Gen. Consequently, Sung Contracting lost its right to all claims for payment even though the project owner, Saks, kept its right to enforce and assert claims under the contract.
This rule has an important implication for the construction industry in Georgia because in order to maintain their rights under a construction contract and enforce them in the future, Georgia constructors must be always aware to obtain and maintain all proper valid licenses for general contractors before performing their work on a Project. The risk of doing business without a valid contractor’s license should be avoided by always checking license status at onset of every contract.
]]>by Mark A. Cobb
This is Part III in our peaks in the forthcoming Georgia Construction Law Handbook which our firm has published. Today’s article addresses Georgia’s Statutory Notice Scheme for subcontractors and material suppliers who lack privity of contract with either the project owner or the prime contractor. If a lower-tier subcontractor or material suppliers wishes to maintain is mechanics and materialmen’s lien rights in Georgia, then they must comply with the obligations found in O.C.G.A. Section 44-14-361.5.
Purpose of Georgia’s Statutory Construction Notice Scheme: Generally speaking, project owners and prime contractors are responsible for making sure that payments flow down-stream to the lower tiers. They should know the identity of all of their subcontractors, but they may not know the identity of the sub-subcontractors or the building material suppliers. Thus, Georgia’s notice scheme was designed to give these names to the prime contractor and the owner. Thus, sub-subcontractors and material suppliers to subcontractors (or lower) need to comply with this statutory scheme. If they do this, then they preserve their lien rights, and they may be able to seek payment from those upstream (such as the general contractor, owner or surety) as well as their original client/customer.
Dedifnitions: There are three definitions which are essential to know to understand Georgia’s Notice Scheme:
PRACTICAL TIP: IF A CLAIMANT CONTRACTS DIRECTLY WITH THE PRIME CONTRACTOR OR PROJECT OWNER, THEN IT DOES NOT NEED TO SEND ANY NOTICES; IF A CLAIMANT CONTRACTS WITH OR SUPPLIES TO A SUBCONTRACTOR (OR ANYONE ELSE), THEN THE ABOVE NOTICES MUST BE SENT.
Obligations to Comply with Notice Scheme: Those who must comply with the notice scheme in order to maintain their right to file a Materialmen’s Lien (if needed) such as a sub-subcontractor or a material supplier to a subcontractor, they must meet the following obligations:
Please note that the NTO must be sent to the GC and the Owner to the address listed on the Notice of Commencement
Practical Tips for those giving notices:
By Mark A. Cobb
As readers from our last post know, we are just days away from launching the Second Edition of the Georgia Construction Handbook for Materialmen’s Liens and Payment Bonds. Since Georgia’s new lien laws begin to take effect on January 1, 2021, this new edition is vital for all contractors, subcontractors, design professionals, and material suppliers. As we wait the final printing from the publisher, we are sharing parts of the handbook to our loyal readers. Last week, we discussed some of the updated deadlines regarding Affidavit of Nonpayments. This week, we are previewing the section on pre-bidding tips:
The best time to ask for something from someone is when they want something in return. Thus, the best time to perform due diligence on an entity (and its principals) is when the relationship begins with a new project owner, prime contractor, subcontractor, or supplier, it is the best time to perform due diligence on that entity and its principals.
Every construction tier effectively extends credit to those above them. Thus, it may be useful to obtain a credit application (even if it is called a “New Client Intake Form”) to collect useful information to determine an owner or a contractor’s credit worthiness or assist in the due diligence investigation; it can also help gather information that might assist in pursuing bad-debt. At a minimum, make sure that credit applications include the following:
DUE DILIGENCE requires more than information from a client or customer; each entity entering into a contract should have their team independently verify the work ethic and payment history of each new relationship. Such information may include the following:
Depending upon the nature of the CONTRACT, the other party should sign an agreement of your written terms. Consider including the following:
In all levels of contracting, PERSONAL GUARANTEES can be used, consider the following:
As discussed in more detail below, Georgia’s statutory notice scheme may require that notices to the project owner and the general contractor be sent; although your subcontractor may not have all of the necessary information, try to get the following:
In order to take advantage of some of the useful collection techniques such as materialmen’s lien and payment bond claims, claimants must make certain that its internal accounting procedures comply:
As our readers know, the 2020 Georgia Legislative Session amended Georgia’s Lien Laws, and these new rules take effect on January 1, 2021. These amendments to the laws were in response to a Georgia Court of Appeals decisions which negatively impacted construction professionals.
In anticipation of this, we have completely revised our Georgia Handbook on Materialmen’s Liens and Payment Bonds. This new edition includes all of the 2020 / 2021 changes to Georgia Lien Laws, and it includes even more substantive lien law and payment bond law basics than earlier editions of the handbook. The handbook will be available in a 28-page print edition for our clients and friends as well as for free download on our website in December; however, until it is available there, we are giving our readers a sneak peak into some of the updated information.
Georgia’s new lien laws have changes some of the deadlines for those contractors and material suppliers who desire to keep their payment bond rights and their rights to file a materialmen’s lien. Specifically, if a design professional, contractor, subcontractor, or supplier executes one of Georgia’s statutory lien waiver forms and they do not received payment, then that design professional, contractor, subcontractor, or supplies has ninety (90) days in which to file an Affidavit of Nonpayment in order to void the lien waiver.
The latest edition of the Lien and Bond Handbook includes an explanation of this amendment to the lien laws as well as updates all of the essential deadlines regularly used by construction professionals. Here is a peak at the list of updated deadlines related to Georgia lien claims and payment bond deadlines:
In order to take advantage of Georgia’s materialmen’s lien and payment bonds statutes, potential lien claimants must fulfill all of their obligations. The following is a list of some of the more important deadlines which suppliers might encounter. Meeting these deadlines can help prevent payment issues on construction projects.
General Contractor/Project Owner’s deadline to file a Notice of Commencement: 15 days from the start of the project to file
General Contractor’s deadline to provide a copy of Notice of Commencement: 10 days from receipt of request to provide copy to requestor
Subcontractor / Supplier’s Notice to Owner & Notice to Contractor deadline: within 30 days from the first day in which labor, services, or materials are first supplied
Deadline for Filing Preliminary Liens: within 30 days after the date a party delivered any materials or provided any labor or services for which a lien may be claimed
Deadline for Filing Affidavit of Nonpayment if Georgia Lien Waiver is signed but payment is not received: within 90 days of the date of the lien waiver
Deadline to File a Materialmen’s Lien: within 90 days of the last day worked
Deadline to Make a Payment Bond Claim: within 90 days of the last day worked
Deadline to Commence an Action to Perfect a Lien if no Notice of Contest of Lien is filed: within 1 year of lien filing date
Deadline to Commence an Action to Perfect a Lien if a Notice of Contest of Lien is filed: within 60 days of the filing of the Notice of Contest
Deadline to File a Lawsuit on a Bond Claim: Depends on type of bond and (often within 6 months to 1 year)
Deadline to File a Notice of Action of Filing Suit: within 30 days of commencing an action to enforce lien rights
]]>by Mark A. Cobb
Those contractors or suppliers who file Claims of Lien against their projects usually understand that filing the materialmen’s lien is the first step to recovering the amount which is owed. Filing the lien is often the easier part but how to proceed after the lien is filed requires an analysis of the law, creative problem-solving, and client-driven goals. This article cannot possible discuss every scenario, however, it does discuss some of the most common scenarios encountered by our clients.
Please keep in mind that, regardless of the steps taken, a Georgia lien claimant must timely perfect its lien; otherwise, the lien will expire as an operation of law. The word “perfect” is defined as follows:
to take all required steps to achieve a result, such as obtaining a lien or other security by legal action or completing and filing all documents to present a case to a court.
Under Georgia law, any number of steps may be undertaken to properly perfect a lien including filing suit or making a demand for an arbitration. In addition, after commencing an action, a Notice of Filing of Claim to Enforce a Lien must be filed in the real estate records and cross-reference the lien. A good construction attorney can assist the lien claimant in making this strategic decision when necessary.
The deadline to perfect the lien is either (i) within 365 days from the date of filing for record of your claim of lien (O.C.G.A Section 44-14-361.1) or (ii) sixty (60) days from the receipt of a Notice of Contest of Lien. (O.C.G.A. Section 44-14-368). If a Notice of Contest of Lien is received, then a lien claimant may want to schedule an appointment with its construction attorney as the Notice of Contest of Lien can reduce the options significantly. Similarly, when calculating any deadline, please keep in mind holidays, weekends, and leap years. Experience has taught us to always use the earliest possible date to avoid potential problems and costs.
Since the typical lien claimant may have up to a year before it needs to perfect its lien, it is useful to think about some of the options which may be available:
1. Evaluate the Reason(s) for Non-Payment. Occasionally, the lien deadline forces a claimant to file the lien first, and then ask questions later. Now, is a good time to look into the reasons in-depth as it may help determine the next steps. For example, higher tier cash-flow issues may dictate a different tactic than a defect claim or termination claim against entity claiming the mateiralmen’s lien.
2. Review the Contract. There are many reasons to perform a thorough contract review including a review of the rights (and obligations) under the contract agreement. For example, many construction contracts require pre-litigation mediation or arbitration, and these provisions may impact your timetable as well as lower the costs of recovery. In addition, reviewing the contract can help you understand which state’s laws apply, the location where litigation is to take place (in Georgia/outside of Georgia), and the court where litigation is to occur (Federal or state courts).
3. Invite a Mediation Opportunity. Even if the lien claimant’s construction contract does not mandate mediation as an option, there may reason to contact the other parties to see if they will consent to mediation to resolve the dispute instead of, for example, forcing the filing of a lawsuit. This can be particularly useful as the mediation might be better suited to address non-economic activities such as completion of punch list work, establish milestones for payment, or ratification of a contract.
4. Negotiate a Settlement. Until the deadline to perfect the lien nears, the lien claimant can attempt to engage the other party into settlement discussions (without the heavy-hand of filing a lawsuit). This can be an effective dispute resolution method as it can include a payout over time.
5. Send a Demand Letter. Although the property owner and any higher-tier contractors should have been sent a copy of the recorded materialmen’s lien, a demand letter may be useful as it actually threatens suit. n addition, it may be a prerequisite to filing suit or commencing an action. Sometimes, clients ask that we send a draft of the complaint along with the demand letter to underscore their seriousness and, hopefully, bring the other party to the discussion table.
6. Be more aggressive and commence an action. In some cases, negotiation or settlement conferences waste time and money. Thus, other clients direct us to go ahead and file suit to perfect the lien. This may be done to get ahead of other creditors or to avoid missing the deadline. If the claim of lien is less than $15,000.00, then the lien claimant may be able to handle this matter itself by filing suit in Georgia’s Magistrate Court (a/k/a small claims court); otherwise, an attorney may be required. Regardless, a Notice of Filing of Action of Claim to Enforce a Lien must also be timely filed and all other requirements met.
7. Do nothing. Some clients prefer to adopt a wait-and-see approach to their lien; then, as the deadline to perfect the lien approaches, they will decide whether it is economically feasible to file a suit or arbitration claim.
These are just some of the most common options which our clients find useful to consider while they wait for a response from the filing of the lien. And, although we hope that our readers find this helpful, we acknowledge that each matter is different, and creative problem-solving thought must be engaged in every situation. If you are a Georgia lien claimant, and you need to perfect your lien, please remember do not wait until the deadline is too close as commencing an action to perfect a lien takes time to get it right. Our construction attorneys welcome your questions or an opportunity to set up an appointment to discuss your lien rights fully. Please click here to contact us.
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