Construction projects are all about deadlines–30 days, 60 days, 90 days…..You’re always calculating when you will start or complete your work during a project.
And, have you ever finished a project and when payment is slow, you want to know the deadline before your ability to file a payment bond or materialmen’s lien expires? Affidavits of Nonpayment, for example, must be filed within 60 days from the date of your Georgia lien waiver, but your construction lien must be filed within 90 days of the last day you were on the job.
Well, there’s no need to keep counting out on your fingers or searching for the calendar you keep misplacing–Cobb Law Group has created a calendar wheel for this very thing, and as a small thank you, we will drop one in the mail to you for FREE!! It’s so easy, just
1. “Like” Cobb Law Group on Facebook;
2. Leave a comment on the blog with a topic you would like for us to write about in a future blog article or tell us how you found us; and
3. E-mail us your mailing address firstname.lastname@example.org
No more scrambling around or being lazy about those deadlines–we use ours all the time!
Giveaway ends when supplies run-out!
by Mark A. Cobb
The Georgia Mechanics and Materialmen’s Lien Law Statutes (O.C.G.A. Section 44-14-360 et seq.) govern all aspects of filing construction liens in Georgia, and our construction lawyers have filed hundreds or thousands of liens on behalf of contractors, specialty subcontractors and material suppliers in virtually every county in Georgia!
Disclaimer: This blog post and its links (just like all of our blog posts) try to offer SOME of information regarding some of the most common questions which we get. Unfortunately, we cannot offer legal advice through a blog article, and you should not file a lien in Georgia based upon the information provided through our blog and website. Thus, we strongly encourage any potential lien claimant to seek competent legal advice from an experienced Georgia lien attorney in order protect your rights–we can provide you some useful guidelines in our blog articles, but we cannot cover all of the exceptions, loopholes, alternate solutions and pitfalls of filing construction liens in Georgia. When it comes to Georgia’s lien requirements and surety bond claims, there is simply no substitute for experience and Mark Cobb has over 20 years for experience! To learn more about Mark Cobb, please click here > >
Strict Compliance with every aspect of Georgia’s Lien Laws: Because materialmen’s liens essentially make a third party (such as the property owner) responsible for making sure that you get paid, Georgia courts have consistently required that lien claimants strictly comply with every aspect of the lien laws. To better understand Georgia’s strict compliance requirements, please click here > >
Preliminary Requirements for Filing a Lien in Georgia: Those in privity of contract with either the owner or the general contractor do not have any preliminary notice requirements in Georgia; however, if you are a third tier sub-subcontractor or material supplier then you probably need to send a Notice to Owner and a Notice to Contractor (sometimes called Notice of Furnishing, NTO, or NTC) within the first 30 days you began working on the project. To learn more about NTOs, please click here > >
Deadline for Filing a Lien in Georgia: All types of construction liens must be filed within 90 days of the last day in which they were physically on the job site (NOT invoice date!); if you signed a lien waiver, then your deadline to file a lien may be shortened to the 60th day from the date of the lien waiver. To read more about this, please click here > >
Georgia Lien Form: Although there is no magic bullet form for filing liens in Georgia, our legislature has mandated certain requirements which must be contained in the lien including some specific language and some particular font sizes. To see a copy of the Official Code of Georgia Section 44-14-361.1 with specific language requirements for liens, please click here > >
Costs & Jurisdiction for Filing a Lien in Georgia: Lien Claimants must file their Georgia liens in the county where the construction project was located. Liens are filed with the Clerk of the Superior Court and the filing fees are, currently, $5.00 for the first page and $2.00 for each additional page. To see a list of addresses, telephone numbers and websites for the clerk of court of each Georgia county, please click here > >
Statutory Notice of Filing of Lien: No later than 2 days after a claim of lien is filed with the clerk of court, lien claimant must send each owner of the real estate which you liened a copy of your lien.
Perfecting Your Lien: Unless the owner of the real estate where the lien is place files a proper Notice of Contest of Lien, a Georgia materialman’s lien will expire one year from date of the filing of the lien unless a law suit is filed against the entity with whom you contacted (if you are a subcontractor, this would likely be the general contractor; if you are a material supplier, then it might be either a subcontractor or the prime contractor. To read more about this, please click here > >
Georgia Notice of Filing of Action: Within 30 days of filing a law suit to perfect a construction lien, the lien claimant must also file a Notice of Filing of Action with the clerk of court in the county where the lien was filed. To read more about Notices of Filing of Action, please click here > >
Georgia Foreclosure of Lien Action: Sometimes, it is possible to combine the foreclosure of the lien action with the lawsuit a lien claimant filed within one year of the filing of the lien; however, jurisdictional or strategic differences may prevent this; if so, then after the “first” lawsuit is filed, and if the lien claimant prevails in that lawsuit, then Georgia’s lien laws require a second lawsuit to begin the foreclosure process (against the owner of the real estate). To read more about this process, please click here > >
Only Georgia Lawyers Can File Materialmen’s Liens in Georgia: As you can see from this very basic overview, filing a proper materialmen’s lien in Georgia is very technical and–from the first day you worked until the end of the lien foreclosure action–Georgia Claims of Liens must be in strict compliance with ALL of the requirements. Furthermore, its importanta for a potential lien claimants to understand that lien filing services are prohibited from filing construction liens in Georgia–only lawyers admitted to practice in Georgia are allowed to file materialmen’s liens in the lien records.
We hope that this overview on how to file a supplier lien or subcontractor lien on a Georgia job site has helped to provide you with useful and basic information regarding the lien process in Georgia. If you have worked on a Georgia construction project and you have not received payment, please contact an experienced Georgia construction attorney today. The lien and bond lawyers at the Cobb Law Group and help you, please telephone us at 1-866-960-9539 or email us today. We can help you prepare and file your lien anywhere in the State of Georgia!
by Mark A. Cobb
Since our law firm has a significant core practice area in which we file and perfect mechanics & materialmen’s liens and payment bond claims throughout Georgia, we address prospective clients’ lien questions almost everyday. We are surprised how many contractors and suppliers’ knowledge of Georgia’s construction lien requirements is based upon obsolete lien laws. In 2009, the Georgia legislature approved several significant changes to the Georgia’s Mechanics and Materialmen’s Lien Act. Since we continue to get so many questions regarding these changes, we thought a brief review of the changes made to Georgia’s lien laws in 2009 would be useful to many potential Georgia lien claimants:
SOME OF THE SIGNIFICANT 2009 GEORGIA LIEN LAW CHANGES:
- Date Georgia’s 2009 Lien Law Revisions Went Into Effect: March 31, 2009;
- Notice to Contractor/Notice to Owner: These notices to contractors (sometimes called Notices of Furnishing) must be sent to the owner and the contractor by registered mail, certified mail or statutory overnight delivery at the addresses specified in the Notice of Commencement (the former statutes did not specify the method these notices were to be given);
- Deadline for Filing a Claim of Lien: A Claim of Lien must be filed within 90 days after the lien claimant actually worked on the project or supplied materials to the project (the former requirement was more ambiguous requiring that a claim of lien be filed within three months from the last day worked); it is very important to note that Georgia’s new lien waiver forms may, for all practical purposes, shorten this deadline to sixty days from the date the lien waiver was signed;
- Deadline for Sending a Copy of the Lien to Owner & Contractor: A lien claimant is required to send a copy of the lien to the owner (and, if a Notice of Commencement was filed, to the general contractor) within two business days after the claim of lien is filed (the former lien requirement was ambiguous as to the deadline for sending a copy of the lien to the owner);
- Deadline for Perfecting or Enforcing a Claim of Lien: A lien claimant must file a legal action against the party with whom the lien claimant contracted within 365 days of the date the lien was filed (the former requirement was more ambiguous requiring that a legal action be filed within one year of the last day worked by the lien claimant); it is important to note that this deadline may be expedited if the property owner or the general contractor files a Notice of Contest of Lien (see below);
- What is a Legal Action (for purposes of lien enforcement): Georgia’s lien statute specifies that the lien claimant’s obligation to file a “legal action” may include filing a lawsuit, filing a proof of claim in a bankruptcy proceeding, or filing a demand for arbitration action (the former statute did not include arbitration as a legal action which would perfect the lien);
- Deadline for Filing a Notice of Action: The lien claimant must record its Notice of Filing of Action For Claim on Mechanics and Materialmen’s Liens within 30 days from the date it began a legal action to enforce its lien rights (the former statutes required that this notice be filed within 14 days);
- Notice of Lien Discharge Bond: If an owner, contractor or other interested party files a bond to discharge a materialmen’s lien, then, within seven days of filing a bond to discharge a lien, the party filing the bond must give the lien claimant notice of the filing of the bond (the former lien provisions did not require that notice be given to the lien claimant);
- Notice of Contest of Lien: This is an entirely new section which allows property owners and contractors the ability to accelerate the lien claimant’s deadline to file a legal action to enforce its lien claim; it is important to note that a properly filed lien contest will shorten the lien claimant’s deadline to file a legal action to enforce its lien to 60 days from its receipt of the notice;
- New Georgia Lien Waiver and Lien Release Forms: The revisions introduced new interim lien waiver forms and new final lien waiver forms as the only acceptable lien waiver forms to be used in Georgia; some of the material changes to the new forms include (i) specific language requirements; (ii) requirements that capital letters and a 12-point be used, (iii) the new forms release bond rights as well as lien rights, and, perhaps most importantly, (iv) sixty days after the lien waivers are signed, conditional lien waivers become unconditional lien waivers;
- New Affidavit of Nonpayment Form: Similarly, the statutory form for the Affidavit of Nonpayment has been changed and the older form should not be used any longer; changes to this form include (i) required formatting to include capital letters and font size, (ii) specific language required, (iii) the deadline for filing an Affidavit of Nonpayment has been extended from 30 days to within 60 days, and (iv) if an Affidavit of Nonpayment is filed, then within seven days of filing, a copy of the Notice of Nonpayment must be sent to the property owner (and if a Notice of Commencement had been filed then notice must also be sent to the general contractor);
- New Claim of Lien Form: The Georgia Claim of Lien form was revised to include (i) statutory required language, (ii) specific language printed in 12 point bold font, and (iii) clarification that the date when the claim became due is that last day in which a contractor or subcontractor actually worked on the real estate or a material supplier provided materials for use on the project.
Please keep in mind that this article is a brief summary of the significant changes to the lien laws made by the Georgia legislature; there are additional changes which have not been covered in this article; similarly, this article does not include matters which did not change (but with which lien claimants must strictly comply); thus, if you have a potential construction lien claim or if you are an owner or a general contractor trying to address a claim lien against your project, then you should contact an experienced Georgia construction law attorney who can help you understand, evaluate and file the claim of lien. Contact the Cobb Law Group to help you with your lien claim today!
We invite you to leave a comment below and tell us how the 2009 changes in the Georgia Lien Laws have affected you or your business.
By: Mark A. Cobb
Most of the subcontractors and specialty trade suppliers we speak to understand that all materialmen’s liens filed in Georgia must be filed within ninety days of the last day in which they worked or supplied materials to the job. However, very few of them understand that signing an interim lien waiver (or a final lien release) SHORTENS the deadline for filing a Claim of Lien in Georgia!
PRACTICAL TIP # 1: Change your mindset from 90 days from the last day worked to 60 days from the date of the lien waiver or 90 days from the last day worked–whichever is shorter!
That’s right, if you sign either a Interim Waiver & Release Upon Payment (a/k/a Interim Lien Waiver) or Final Waiver & Release Upon Payment (a/k/a Final Lien Release), then you have only 60 days from the date of the lien waiver in which to either (i) file an Affidavit of Nonpayment or (ii) file a lien pursuant to the Georgia Mechanics and Materialmen Lien Act.
The reasoning behind this oft-misunderstood rule is based upon the purpose of the lien waiver. In Georgia, lien waivers are essentially a document that a subcontractor or supplier signs which states (i) the amount due through a certain date and (ii) if the entity executing the lien waiver doesn’t let the construction project owner know that payment has been received with 60 days, then (iii) after 60 days, the owner can assume that payment was received (even if you didn’t receive the payment!). Thus, it is reasoned, that if you execute any lien waiver or Release, and you are not paid within 60 days of the date of the lien waiver, then Georgia law presumes that you received payment; and you are prohibited from filing a Claim of Lien after the expiration of the sixty days from the date of the lien waiver.
So how do I calculate the deadline for filing a mechanic’s lien in Georgia?
- First, calculate the 90th day from the date that you were last physically working on the Georgia project or delivered materials to the project; your deadline to file a Claim of Lien is before the 90th day (remember that weekends and holidays do not extend the deadline to file so you may actually only have 87 days following your last day worked to file your Materialmen’s Lien in Georgia–> click here for more information on calculating deadlines!)
- Second, if you signed a lien waiver, then calculate the 60th day from the date you signed the lien waiver; your deadline to file a Claim of Lien (or file an Affidavit of Nonpayment) is before the 60th day you just calculated (weekend and holidays probably to do not extend this deadline!)
- Third, compare the two deadlines which you just calculated–the first deadline to expire is your deadline to file your lien in Georgia!
For example, let’s analyze the lien deadline for a concrete supplier who provided materials to a Georgia construction project (private or public works); the last day they delivered materials was March 1; on March 15, they were asked to execute a Final Waiver and Release Upon Payment. If the concrete supplier does not receive payment, what is the deadline for filing a construction lien?
- Calculate 90 days from last day worked: Since they last delivered materials on March 1, the 90th day following this is May 30; in fact, however, the lien must be filed prior to May 30 (therefore, the lien must be filed on or before the last business day before May 30);
- Calculate 60 days from Lien Waiver: Since the lien waiver was signed March 15, the cement supplier has until May 14 in which to file an Affidavit of Nonpayment or file a Claim of Lien.
- Compare the date and go with the shortest! Thus, there is a May 29th deadline and a May 13th deadline. Since the May 13 deadline to contest the lien waiver expires first, the concrete supplier’s deadline for preparing and filing a supplier’s lien in Georgia is the last business day before May 14.
These deadlines can be very tricky, so it is very important to calculate your deadlines carefully so that you are not caught without payment and without recourse. If you have questions about filing and perfecting any type of construction lien in Georgia, please give us a call!
This is a general information article and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.
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.
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!
When do I need to file a materialman’s lien in Georgia?
According to my telephone conversations with potential clients, this is the question of the week! If you don’t know, then let us say it clearly, all construction liens (this includes supplier liens, subcontractor liens, contractor liens, mechanic liens, and materialman liens) must be filed within 90 days from the last day in which the lien claimant actually worked on the project–this deadline is not based on invoice dates!
Well, a lot of potential lien claimants seem to know this, but they are unclear how to put this into practice, and we understand because this can be confusing. Here are some tips to help you navigate Georgia’s Lien Deadlines:
Make Sure You Calculate the 90 Day Deadline Correctly: We recently had someone contact us who assured us that there were still a few days in which a materialmen’s lien could be timely filed; as soon as we calculated the deadline ourselves, it was apparent that the deadline had already expired: Our caller made three mistakes:
- Count Days Not Months: Our caller was using months to calculate the deadline–he was counting November 22 to December 22 to January 22 to February 22 instead of counting actual days; unfortunately, Georgia liens must be filed within a 90 day deadline and this caller’s information failed to take into account December’s 31st day and January 31st day. Consequently, his right to file a mechanic’s lien in Georgia did not expire February 5, it expired a few days earlier;
- Liens Need to be Filed Within 90 Days: Furthermore, our caller thought the lien could be filed on the 90th day; in reality, the lien should be filed prior to the 90th day following the last day worked.
- Weekends and Holidays Do Not Extend Deadline: Due to the randomness of the calendar, our caller’s 90th day following the last day worked fell on a Monday; since all Georgia liens must be filed within 90 days of the last day worked, that meant his claim of lien had be filed Sunday or before. As you know, courthouses are closed on Saturday and Sunday which shortened our caller’s deadline to file a Georgia lien to Friday–87 days from the date he last worked on the project!
Practical Tip # 1: All mechanic’s and materialmen’s lien in Georgia must be filed on or before the 89th day from the last day in which the lien claimant performed services or supplied materials to the project (and neither holidays nor weekends extend this deadline.)
This week, we also had a potential lien claimant who just finished his work on a construction project in Georgia, but he had not been paid. He wanted to file a materialmen’s lien as soon as possible. And, that is his legal right. This leads us to the question, When should someone who is not receiving payment for their labor or materials on a construction project file a lien? Every situation is different–and filing mechanics’ liens should be based upon each unique circumstance–but a general rule of thumb is the soon the better. There are many, many reasons for this, but here are some of the common reasons for filing your Georgia lien sooner rather than later:
- filing a mechanic’s lien sooner may give you priority against other creditors or other lien claimants;
- filing a mechanic’s lien sooner may help you get paid sooner as there may still be retainage on the project (which might be paid to you);
- filing a mechanic’s lien sooner will prevent problems such as missing any deadlines;
- filing a mechanic’s lien sooner will give the attorney filing the construction lien time to do it in his regular course of business (no rush fees!)
- filing a mechanic’s lien sooner can lower your costs–liens can be mailed to the court, for example, rather than being sent by courier or overnighted;
- as a rule of thumb, the sooner you begin exercising your right to file a lien, the sooner, you’ll get paid.
Practical Tip # 2: Don’t wait until the last minute to file a construction lien in the State of Georgia; instead, file it as soon as you realize that you may not get paid.
The Cobb Law Group focuses its practice on filing and perfecting every type of construction lien throughout the entire state. If you have any questions, please contact us. Also, please leave comments about your experiences with meeting lien filing deadlines.
Since writing the recent blog article about the holding in the Handy Andy of Eastman, Inc. v. Evans, et al. matter, we have received requests for more information about “Strict Compliance” and what this phrase means to Georgia lien claimants.
Background: First, it’s important to the remember that all construction liens are created by statue (they are not a product of common law); they are unique to the United States and other counties who have been or are under the influence of our legal system (such as the Philippines). Mechanics and materialmen’s lien were first authorized by the United State’s Congress to encourage laborers, suppliers, and contractors to work to build Washington, DC out of the swamp and rural lands of Maryland and Virginia. Those working to the build new capital were promised that, if they were not paid, they would have a “lien” on the real estate and it’s improvements.
Lien Laws are Construed in Favor of Property Owners: Since material men’s liens make property owners (in addition to the contracting parties) liable for a debt which they otherwise might not be liable (except for liens from general contractors), the materialmen’s lien statutes are construed in favor of the property owner and against the materialmen. Furthermore, since liens are statutory, lien claims must follow the statutes regarding liens very carefully, and the materialmen’s lien statute requires strict compliance; in other words, before a materialmen’s lien can be allowed, the lien claimant must show compliance with all conditions of the statute.
Why are Lien Laws Construed that Way: Strict compliance with the materialmen’s lien statutes is required because a materialmen’s lien effectively permits the transfer of liability from the person who actually contracted with the materialmen 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 materialmen, contractually or otherwise.
What does that Mean for Subcontractors & Suppliers Today: Materialmen’s Liens (and pretty much all of Georgia’s construction law documents) are held to a very high standard. Lien claimants need to correctly include all of the language required by Georgia’s lien law, and every aspect of filing a lien (notices, deadlines, etc.) must be in precise accordance (i.e., strict compliance) with the requirements of the Statutes.
Keeping up to date on all of the legal requirements for filing contractor and subcontractor liens in Georgia can be very daunting. Contact us to help ensure that your liens meets all of Georgia’s requirements.
In our last blog we told you about some bad news to Georgia’s Lien Claimants, but we promised to share some better news in this installment. In addition to the case discussed in our last article, a second Georgia Court of Appeals case styled, Georgia Primary Bank v. Atlanta Paving, Inc., offers some hope for those subcontracting or suppling on Georgia construction projects.
In this case, Atlanta Paving, Inc. performed work on a construction project, but it did not get paid; so, on June 5, 2008, Atlanta Paving filed its materialmen’s lien against real property located in Dawson County, Georgia. Five days prior to the lien’s filing, Georgia Primary Bank, as the construction lender for the project, closed on its loan with the project owner, and took a security interest in the project. The bank, however, did not file its Deed to Secure Debt in the real estate records until June 10, 2008. Thus, the materialmen’s lien was filed in the interim period between a loan closing and the recordation of the loan closing documents.
So, what’s a construction lender to do?! The bank sought to defeat the materialmen’s lien on two points: (i) that the bank’s deed to secure debt was superior to the materialmen’s lien, and (ii) that an affidavit the bank received as a part of its loan closing promised that “CONTRACTOR represents and certifies that it has been (or will be, upon receipt of the amount described in paragraph 2) paid in full all amounts and bills due for all labor, materials, fixtures and supplies …”
Thankfully for Georgia’s sub-contractors and suppliers, the Court Appeals upheld the trial court’s findings and agreed that Atlanta Paving’s lien was a valid lien subject to foreclosure!
Specifically, the Court of Appeals found that mechanic’s liens are “special liens” in Georgia, and as such, it is superior to all other liens not excepted by Georgia’s Lien Law (which construction mortgages as not). Thus, although the loan closing may have occurred on May 30, a materialmen’s lien filed on June 5 is superior to the loan closing documents filed on June 10. To quote the court, “It is well settled that ‘the filing and recordation of an instrument provides constructive notice to subsequent purchasers of the existence of a prior interest in the property’.”
PRACTICAL TIP NUMBER 1: File your Georgia Claim of Lien as quickly as you can.
The Appellate Court also found that the general contractor’s affidavit did not comply with the legal requirements of the Contractor’s Affidavit statutes. OCGA § 44–14–361.2(a) allows for the dissolution of a materialman’s lien only when the lien has been waived by the claimant or the contractor gives a sworn statement that “the agreed price or reasonable value of the labor, services, or materials has been paid or waived in writing by the lien claimant.” Here, the contractor swore that “all contractors, subcontractors, suppliers[,] and laborers have been ( or will be, upon receipt of the amount described in paragraph 2) paid in full. …” Thus, on its face, the release signed by the contractor was insufficient to satisfy the plain language of the statute, and the affidavit failed to extinguish Atlanta Paving’s lien.
PRACTICAL TIP NUMBER 2: Contractor Affidavits are tricky business so, if you are a contractor, make sure your affidavit conforms to Georgia’s requirements; if you are a subcontractor, don’t immediately assume that your lien has been voided just because you are presented with a Contractor’s Affidavit.
Please let us know about your thoughts and experiences!
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!