Most southeastern states require suppliers and subcontractors to give some sort of Notice to Owner (“NTO”); however, each state has its own special requirements and relying on one state’s requirements to get through another state’s requirements will land you in hot water. We get a number a telephone calls each week from suppliers and materialmen from nearby states who are providing construction materials on Georgia projects, and they ask us about Georgia’s NTO requirements. Today, we thought you might appreciate a brief overview of Georgia’s NTO requirements.
What is a Notice to Owner (“NTO”)? An NTO is a required notice which lists who is supplying materials or who has been subcontracted on a construction project in Georgia. The NTO must contain certain information as mandated by the Georgia legislature, and it must be sent to the owner of the construction project as well as the project’s general contractor (this second letter is sometimes referred to as a Notice to General Contractor).
Why are Notices to Owner Required? Generally speaking, project owners are responsible for making sure that the money they pay on construction projects filter down to all the contractors, sub-contractors and materialmen who worked on the project. During Atlanta’s construction boom in the 1990′s, construction projects where getting larger and larger, and it was difficult for project owners to track their payments down the line. Of course, project owners knew whom they had hired as the general contractor, and the general contractor (acting as the project owner’s agent) knew the subcontractors they had hired. However, identifying the sub-sub-contractors and material suppliers was a daunting tasks. Thus, the Georgia Legislature instituted the NTO procedure.
Who Must Give a Notice to Owner? Third-tier (and lower) subcontractors and materialmen are required to give NTO’s. Contractors in a direct contractual relationship with either the project owner or the general contractor do not need to send an NTO. We have several customers who work directly for the owner or the GC who send NTO’s–this is allowed although it is not required.
Are There Exceptions to Sending an Notice to Owner (“NTO”)? Yes, third-tier contractors and suppliers are required to send an NTO only if the project owner or the general contractor filed a Notice of Commencement in the real estate records in the county where the project is located. If such a Notice of Commencement is not filed, then an NTO is not required to be sent.
If a Notice to Owner (“NTO”) is Not Sent, Can a Materialmen’s Lien be Filed? It depends on the specific circumstances. It can depend on such things as the type of contract used between the parties, the nature of the Notice of Commencement, the work dates, etc., and we encourage you to contact your lawyer or us for an analysis of your unique circumstances.
Notices to Owners, Notices to General Contractors, Notices of Commencements can be very confusing to those new to the industry or those from another state which has similar–but different–requirements. Therefore, we have put this blog post together for informational purposes only and encourage those with questions to seek competent legal advice (contact us!). We also ask our fellow practitioners (particularly those in other states) to comment on or link to information related to Notices to Owners in their own states. Thank you!