GEORGIA CONSTRUCTION, BOND & LIEN LAW BLOG


Georgia Preliminary Notice of Liens, GA Pre-Liens–A PRIMER!

Posted in Materilamen's Liens,Preliminary Notice of Lien by Administrator on the March 22nd, 2011

Understandably, many suppliers and subcontractors in Georgia confuse a Preliminary Notice of Lien and a Mechanic’s or Materialmen’s Lien.  (Due to the lingo in other states’ laws, many people also confuse the term “Preliminary Lien” or “Pre-Lien” with “Notice to Owner”, but we’ll save that for another bLAWg topic!).

A Georgia Preliminary Notice of Lien (sometimes referred to as “Pre-Liens”) is a pseudo-lien filed by a subcontractor, supplier, or materialmen within 30 days of the first day in which a party delivered any material or provided any labor or service for which a materialmen’s lien may be claimed.  It’s recorded in the clerk of court’s office and must contain certain information such as (i) the name, address and telephone number of the potential lien claimant, (ii) the name and address of the party with whom the potential lien claimant has contracted, (iii) the name of the owner of the real estate on which the project is being built, (iv) a description of the real estate where the project is located, and (v) a description of the labor, services, and materials furnished by the subcontractor or supplier.  As long-time readers of this blog have learned, all of Georgia’s lien laws must be “strictly construed” which means everything related to construction liens must be exactly as the Georgia statutes required and that includes filing Preliminary Notices of Lien so we suggest hiring a Georgia lawyer to help you with these documents.

Why would a subcontractor or supplier in Georgia want to file a Preliminary Notice of Lien?

There are many reasons why filing Preliminary Notices of Liens are good and help increase your likelihood of recovery.  But, a popular (and necessary) reason for filing them are to protect a potential lien claimant from lien dissolution affidavits.  If a supplier or subcontractor files a lien after a general contractor has signed a contractor’s affidavit, then that lien may–or may not–be valid.  But, if a supplier or subcontractor has filed a Preliminary Notice of Lien, and then later files a materialmen lien, a contractor’s affidavit will not dissolve the lien.  Instead, the burden shifts to the owner to make sure that the person filing the Preliminary Notice of Lien gets paid!  That’s a very good reason to include Preliminary Notices of Liens as a part of your standard construction business practice.

It is important to note that a Georgia Preliminary Notice of Lien is not a materialmen’s lien or a mechanic’s lien.  It expires within 90 days of the last day in which you delivered materials or supplied labor or equipment on the project.  Thus, if payment hasn’t been received, you must still file a materialmen’s lien within 90 days of the last day in which you were on the project even if you filed a Preliminary Notice of Lien.  Failure to timely and accurately file your lien will result in forfeiture of your lien rights and, likely, diminish your ability to recovery the money you are owed.

Thus, a Georgia Preliminary Notice of Lien should be filed within 30 days of your first day on the job; and, if necessary, a Georgia Materialmen’s Lien should be filed within 90 days of the last day you were on the job.  Please contact us today, if we can help you protect your lien rights.

Please leave a comment and share with us your experience with Preliminary Notices of Liens!

Affidavits of Payment, File Lien or Bond Claim–What do I do?

Posted in Affidavit of Nonpayment,Affidavit of Payment,Materilamen's Liens,Payment Bonds by Administrator on the March 14th, 2011

Recently, we wrote a post about Georgia Affidavits of Nonpayment which are documents with which every subcontractor and supplier working on Georgia construction projects should be familiar. In summary, if you sign a lien waiver but you don’t receive payment, then within 60 days of the date of the lien waiver, you must file an Affidavit of Nonpayment in the real estate records of the county where the real estate project is located.  These deadlines must be met, and failure to do so may result in complete inability to collect your money from your contractor or customer, file a materialmen’s lien, or make a claim against a payment bond.  This is so important, and we have received so many telephone questions, that I invite you to review our full post for more information.

Several people have for asked the “next” step.

If you are paid for your services, then you may not have to do anything else.  According to the Georgia Code, those affected by the Affidavit of Nonpayment which you file (such as your customer, the general contractor, the property owner, etc.) may request that you file an Affidavit of Payment in order to “cancel” the Affidavit of Nonpayment you had received.  If you are requested to prepare one, you must do so.  On the other hand, your Affidavit of Nonpayment will eventually expire of its own accord typically upon the earlier of (i) your execution of a subsequent interim lien waiver or final lien waiver or (ii) 90 days after you stop your performance on the job.

If you do not receive payment very shortly after filing your Affidavit of Nonpayment, then you are (likely) on a very short time schedule in which to file your mechanics or materialmen’s lien or make your payment bond claim.  Your deadline to file a construction lien or file a claim against a payment bond ends 90 days from the date you were last on the jobsite–the calculation of this period has nothing to do with the deadlines required for Affidavits of Payments.  Click here to read more about Georgia’s lien laws.

PRACTICAL TIP: Calendar your deadlines:
1.  If you execute any lien waiver, then make sure you promptly receive payment; if you do not receive payment within 45 days, consider contacting a Georgia construction lawyer;
2.  All mechanics and materialmen’s lien in Georgia must be filed within 90 days of the last day in which you were on the project.  This period is not extended even if you file an Affidavit of Nonpayment so contact a Georgia construction lawyer around 60 days following your last day on the job; and
3.  Most payment bond claims must be filed within 90 days of the last day in which you worked on the project.  This period is not extended even in you file an Affidavit of Nonpayment; so, make sure you contact a Georgia construction lawyer around 60 days following your last day on the job.

Payment Bonds, Bid Bonds & Performance Bonds In GA & AL

Posted in Bid Bonds,Payment Bonds,Performand Bonds by Administrator on the March 9th, 2011
Today, we are giving our staff a break by inviting Kristin Bradley with SuretyBonds.com to write a guest post on the different types of bonds required in Georgia & Alabama.  You know, the legal disclaimer that we have to make….we are not responsible for the contents and claims of this article or the company or persons mentionen in the article.  Regardless, we hope you find this interesting.  Enjoy!
 

Although government agencies frequently require the use of contract bonds for construction projects in Georgia and Alabama, local contractors are often left to navigate the bonding process on their own. Getting grasp of how bonds work can help contractors feel better prepared to work with both surety providers and the government agencies that require the bonds.
How contract bonds work: Contract bonds are separate products from insurance policies and liens and should never be confused with either. The confusion probably arises because surety bonds, like insurance policies and mechanics liens, may allow harmed parties to collect recompense when contractors abandon their work mid-project or otherwise perform inadequately.
However, whereas insurance policies and mechanics liens are put in place with the assumption that claims are statistically likely at some point, surety providers execute contract bonds with the intention of avoiding claims and deterring unreliable contractors. Contractors who are unable to meet the application prerequisites will not be able to get a bond and thus will be unable to do work. This process helps weed out contractors who put their clients, and the general public, at greater risk.
Contractor License Bonds: Contractors typically have to secure license bonds before they get a business license to work within a certain area. Contractor license regulations vary by state, and different government agencies outline the specifications.
A number of different regulations outline rules regarding contractor licenses in Alabama, and they vary based on a contractor’s specialty or specific project. General contractors or subcontractors must must secure a contractor’s license from the state if they will be working on a project where labor and materials will cost $50,000 or more. A more specific example is the state’s Board of Heating & Air Conditioning Contractors, which requires a $15,000 contractor license bond for contractors working on heating, cooling or refrigeration projects.  Getting this type of bond in Georgia typically requires communication with the Georgia Construction Industry Licensing Board, which is made up of five state divisions related to the construction industry. The board requires a $25,000 general contractor licensing bond that must be issued by a surety agency licensed to do business in Georgia.
Bid, performance and payment bonds: Three of the most widely utilized contract bonds are bid bonds, performance bonds and payment bonds. Bid bonds provide a guarantee that a contractor will not increase the initial price bid submitted to a project owner. Performance bonds guarantee that a certain level of quality work will be completed. Payment bonds guarantee that the contractor will pay for all materials and subcontractors used during the project.
Alabama Bid Bonds: Alabama Building Commission form C-4 requires a bid bond’s penal sum to be 5% of the principal’s bid amount without exceeding $10,000.
Alabama Performance Bonds: Alabama Building Commission form C-6 requires a performance bond’s penal sum to remain equal to the contract sum as it is adjusted by any and all contract change orders. This means if a contract is written for a $250,000 project, the performance bond’s penal sum will be $250,000. If additional labor and materials increase the project amount to $300,00, the bond’s amount will increase to $300,000 as well.
Alabama Payment Bonds: Alabama Building Commission form C-7 also requires the bond’s penal sum to remain equal to the contract sum as it is adjusted by any and all contract change orders. In both cases the surety provider must approve the increase.
Georgia Bonds: In Georgia, different government agencies—such as the Department of Transportation, the Department of Revenue or the State Board for Residential and General Contractors—regulate separate aspects of the construction industry. Each agency will have its own individual expectations for the different kinds of contract bonds regarding the terms, penal sums and premiums.
Failure to purchase and maintain the necessary bonds as outlined by industry regulations can result in legal action against noncomplying contractors. The resulting fees and penalties are expensive to pay for, not to mention detrimental to a contractor’s professional reputation and credit score. Before beginning work on a project, contractors should make sure they fulfill all contract bond requirements. Finally, contacting a Georgia construction lawyer with any legal questions regarding the bond’s terms is always a good idea.
This has been an guest post by an online surety bond producer that offers over 25,000 bond types to professionals across the nation. The agency has a special interest in helping contractors and their lawyers understand the legalities behind the surety bond process.