As though of you in the construction know, properly filed Claims of Liens (such as construction liens, mechanic’s liens, materialmen’s liens, suppliers liens, etc.) help contractors, subcontractors and suppliers get paid in the State of Georgia. How do Claims of Liens help you get paid?
Although this may be an over-simplification, properly filing a lien helps you obtain collateral for your debt. In other words, let’s assume that you are a material supplier on a construction project in Georgia, and let’s assume that you haven’t been paid for all of the materials which you supplied. The person who purchased the materials from you, of course, owes you for the materials. In addition, however, the real estate where the construction occurred can be “liened” for the amount of the debt. This gives the material supplier an interest in the real estate which, if the material supplier does not receive payment, he has the right to foreclose upon the lien and sell the real estate to pay his debt.
Again, this is a very simplified explanation of Georgia’s Lien Laws, but it makes sense. Throughout the United States, there are differing versions of Liens Laws, but they are all of the benefit of those who are not paid on construction process.
The theory behind Claims of Liens goes something like this: American land owners have been historically seen as the “landed gentry” which implies they have money and education and that they protect those who are less fortunate. Conversely, those working on construction projects have been historically perceived as less educated and a part of the working class. Thus, the real property owners have a duty to make sure that those working on the construction project gets paid.
In addition, it is undisputed that the materials, the labor, the equipment, the skill which those working on the construction project bring to the project have enhanced the value of the real estate, that is, the subcontractor or supplier has “improved” the project up to the value of the improvements made by the subcontractor or supplier. Imagine a marble supplier providing $500,000 worth of marble for the lobby and conference rooms of a building; the marble is installed, but the marble supplier is not paid for its marble. The office building has increased in value because it has a marble lobby and marble conference rooms so it is only equitable (or fair) that the marble supplier be permitted to file a Claim of Lien against the office building for the value of the unpaid materials. Furthermore, if the debt is not collected, then the marble supplier has the right to force the sell of the office building to recover its money.
Again, this entry is meant to be a very rudimentary explanation of Claims of Liens; Georgia’s Mechanics and Materialmen’s Lien Laws have very strict deadlines and requirements which must be strictly followed. If you have accounts receivable on a construction project anywhere in the State of Georgia, contact us to see if your claim is lienable.
A potential client just called with a wonderful question: he had filed a Claim of Lien in Georgia, but he wanted to know if we would enforce his lien rights even though we did not file his original lien.
Yes, is the answer.
There are many lien services–and even some law firms–that only file a client’s mechanic’s liens, but they do not help their clients enforce their lien rights. So, many Georgia lien claimants are left to handle the rest of the matter themselves, but they do not know what to do. We are a full-service, construction and lien law firm with a statewide practice. So, if you have a materialmen’s lien and you need assistance enforcing your lien rights, then please contact us.
Don’t Miss Your Lien Deadline: If we prepared and filed a client’s original construction lien, then we remind them of the statute of limitations on lien enforcement in Georgia; however, I am constantly surprised to learn how many otherwise valid liens expire simply because the lien claimant did not know that liens expire! A Claim of Lien in Georgia expires one-year from the date your materialmen’s lien was filed unless you (i) file a lawsuit against the person or entity with whom you contracted, and (ii) file a Notice of Filing of Action with the clerk of court in the county where the construction project occurred. If you fulfil these requirements before the lien deadline, then your materialmen’s lien will continue to be enforceable.
You Will Probably Have to Hire a Lawyer: I am not trying to be self-serving, but it a simple fact that Georgia courts will not let most businesses represent themselves. If you are a sole practitioner, then you may be able to file your own lawsuit; however, Georgia prohibit corporations, LLCs, LLP’s and other legal entities from representing themselves in a lawsuit so they must hire a lawyer in order to enforce their lien rights.
When you contact us or any other lawyer, it is very useful if you are able to provide a copy of your recorded Georgia lien, proof that you sent the real property owner a copy of the lien, a copy of the Notice to Owner (if appropriate), the original real estate title work as well as the backup documentation (such as the past due invoices, contract, change orders, etc.); also, if you received any response from the property owner, the general contractor or anyone else after your filed the lien, please provide that information as well. This will enable us to better evaluate the enforceability of your claim and help us advise you as to how to best proceed. Finally, please remember to give us plenty of time to evaulate your lien and your options, draft and file a lawsuit, and meet all of Georgia’s other statutory requirements before your lien expires.
Please don’t let your mechanic’s lien expire, please contact a Georgia Construction Lawyer to help you enforce your lien rights; remember, if you don’t enforce your lien rights before the one-year anniversary of the date your Claim of Lien was filed, you will not be able to foreclose your Georgia lien. Call us today!
So many people contact us regarding nonpayment issues on Georgia construction projects, and I thought you might appreciate reading a summary of options we usually discuss during our first conference with our clients:
First, we assess some fundamental issues by asking the following questions:
• What type of services, labor or supplies did you provide?
• What was the last day you actually provided services, labor or supplies to the project?
• Have you been given any notices regarding failure to perform, defects, or other notices?
• Were you providing services, labor or supplies on a privately-owned project, a project owned by a governmental entity (local, State of Georgia or federal project)?
• Are they payment bonds covering the project?
• Was your contract written or oral?
• With whom was your contract (what tier are you)?
• Did you have a personal guaranty from someone guaranteeing payment of the amounts you are owed?
Assuming that you were a general contractor, subcontractor or supplier who provided quality services, materials and labor in a timely fashion, then whomever you contracted with probably owes you the money you are due. And, that is great. However, Georgia construction laws, when correctly applied, may allow you to seek recovery of the debt from a third party. Thus, our next assessment is whether there is any viable third-party who may also be liable for the debt. This can get very technical and complex, but here are some of the common areas we explore:
• Can a materialmen or mechanic’s lien be filed (which may make the real estate where your services, materials or labor was provided liable for the debt)? Click here for more information on this topic!
• Can you make a payment bond claim (which may make a third-party insurer liable for the debt)?
• Can a Constructive Trust be claimed (which may make retainage or other monies owed to a higher tier) which may make provide a source of recovery for your debt?
• Are there circumstances which allow a quantum meruit claim (which may make a third party liable for the debt based upon “fairness” issues)?
• Is there a guarantor which can be pursued?
Needless to say, the more opportunities there are for recovery, then (i) the more likely the recovery will be made, (ii) the higher the recovery is likely to be, (iii) the more quickly the recovery will occur, and (iv) the lower your costs of collection will be.
Ultimately, then, how do you and your Georgia construction lawyer work to improve your recovery?
• Periodically, review your contracts to make sure they comply with current regulations and statutes;
• Obtain a personal guarantee and other useful information (click here for details!);
• Learn all the various deadlines in Georgia for filing Lien Claims and for making payment bond claims (click here for some important Georgia Lien & Bond deadlines);
• Learn the statute of limitations for filing suits to perfect your Georgia Mechanic’s Lien Claims, your private project payment bond claims, your local municipality, State or Georgia and federal government payment bond claims;
If you are looking for a Georgia Construction Law Firm who can handle your files anywhere in the State of Georgia and who understand Georgia’s Construction Lien Laws, Subcontractor Laws, Miller Act and Miller Act Claims, please contact the Cobb Law Group to see how we can improve your collection rate!