GEORGIA CONSTRUCTION, BOND & LIEN LAW BLOG


Enforce Georgia Lien Claim Before Expiration

Steps to Foreclose a Lien In Georgia

by Mark A. Cobb

Admittedly, the Mechanics and Materialmen’s Lien Act gives Georgia’s contractors, subcontractors and material suppliers a giant step towards getting the money they are owed.  And, a giant step is a wonderful gift, but there are other steps which must be undertaken if the lien claimant wishes to enforce its lien.  As we’ve discussed before each and every aspect of Georgia’s Lien Law must be strictly construed.  In other words, every materialmen’s lien claimant must satisfy every requirement of Georgia’s statutes in order to have a valid lien.

Assuming that a claimant holds a valid lien against the real estate where the work was performed or where the claimant’s materials were used, the lien claimant has a “good start” but he or she needs to continue to meet the additional requirements of Georgia’s lien laws in order to preserve, perfect and enforce its construction lien against the real property owner.

As with virtually every aspect of law, there are always exceptions, but generally, Georgia lien foreclosure laws require a lien claimant to complete two distinct steps before actually foreclosing against the lien.

STEP ONE: FILE A LAWSUIT AGAINST THE PARTY WHO OWES YOU MONEY.  In most situations, a property owner has contracted with the general contractor for the construction of his project.  The general contractor, in turn, hires specialty subcontractors and material suppliers to work on and supply products to the project.  If one of the specialty subcontractors or materialmen are not paid for their work, they may be entitled to file a materialmen’s lien against the real estate where the project is located.  In a situation such as this, the lien claimant is usually barred from immediately foreclosing his lien or making the project owner financially responsible for the debt; instead, he must fulfill his obligation and first seek recovery from the person or entity with whom he contracted (e.g., the specialty contractor would have to sue the general contractor before commencing a proceeding against his lien).

Thus, in order to “perfect” its materialmen’s lien, the Georgia lien claimant must file suit against the party with whom they contracted within one (1) year of the date that the lien claimant’s materialmen’s lien was filed.

In addition, within thirty (30) days of filing the lawsuit and pursuant to O.C.G.A. § 44-14-361.1, the lien claimant must file a Notice of Filing of Action for Claim on Mechanics and Materialmen’s Liens with the clerk of court in the county where the lien claimant’s lien was originally filed.

Upon completion of the proper filing of the lawsuit and the subsequent Notice of Action for Claim on Mechanics and Materialmen’s Liens, the lien claimant’s lien has been duly “perfected”.  And, assuming that the lien claimant prevails in its lawsuit to recover damages from the defendant (in our example, the general contractor), then the Georgia lien claimant must complete a second step prior to foreclosing upon its materialmen’s lien.

STEP TWO: FILE A LAWSUIT AGAINST THE OWNER OF THE REAL ESTATE AGAINST WHICH THE CLAIM OF LIEN WAS FILED: Although there are exceptions (bankruptcy of the general contractor, for example, may alleviate the need to file the first lawsuit), the typical, second step to Georgia lien foreclosure is a lawsuit against the real property where your work or materials were utilized to request that the court place a “special lien” against the real estate.  Assuming that the lien claimant prevails in this second lawsuit and a special lien is granted to the lien claimant, the lien claimant may take the steps necessary to foreclose the lien and, hopefully, recover the money it is owed.

As you can tell, there are many pitfalls and dangers to attempting to enforce liens and foreclose real estate on your own.  Failure to strictly comply with Georgia’s lien requirements will invalidate a lien, thus it is highly advisable to engage a qualified construction lawyer with experience filing and enforcing liens.  If your business is an official business entity (for example, a corporation, limited liability company, etc.) then you are required to engage a Georgia attorney as Georgia courts have held that an official business entity cannot “represent themselves” as can individuals.  Furthermore, making the proper claims, meeting the various statute of limitations and understanding civil procedure as your cases proceed, and presenting damages really need an experienced construction lien lawyer to perfect and enforce your materialmen lien rights.

If you have any questions regarding filing lien, perfecting liens, enforcing liens or other Georgia construction law questions, please feel free to call us at (770) 886-5890 ext. 1 or email us today!

2009 Georgia Lien Law Changes: A Summary

2009 Georgia Lien Law Changes

by Mark A. Cobb

Cobb Law Group

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.

Don’t Let your Georgia Lien Expire!

Posted in Materialmen's Lien (enforcement),Materilamen's Liens,Notice of Action by Blue Blog on the August 17th, 2012

Atlanta Georgia Construction Lien and Surety Bond Lawyers
Many subcontractors and material suppliers mistakenly think that once they have filed their Claim of Lien in Georgia, that is all they have to do.   That’s not correct.

Assuming you have a valid Georgia mechanic or materialmen’s lien, the lien is good for one year from the date the lien is filed.  In order to extend the lien beyond this expiration date, however, Georgia’s lien laws require that the Lien Claimant file a lawsuit against the party with whom they contracted before the lien expires.  In addition, the lien claimant must file (and serve) a Notice of Filing of Action for Claim on Mechanics and Materialmen’s Liens.  Fulfilling all of the statutory requirements before the statute of limitations expires is referred to as “perfecting your lien”.

Due to the complexity of complying with Georgia’s Lien Laws and the inherent difficulties of self-representation, it is very important to have an attorney prepare this suit and meet the other statutory requirements on your behalf.

We occasionally get telephone calls, however, from subcontractors or laborers who filed their own liens and call us to help them perfect their liens; unfortunately, there are situations where the costs to enforce your lien rights may not justify the legal expenses.  In those instances, Georgia offers a possible avenue for these smaller claims–Magistrate Court.

Georgia Magistrate Court is our state’s version of small claims court or the people’s court.  Although the Magistrate Court is usually more dignified than the shows on television, it really is a forum for citizens of Georgia who are owed money but aren’t owned enough money to justify the expense and the time of hiring legal counsel.  Thus, you may be able to file and prosecute an action in Magistrate Court pro se (that is, representing yourself).  Magistrate Court currently has a jurisdictional limit of $15,000 which means you can only file your lawsuit in Magistrate Court if the amount you are owed is less than $15,000; consequently, the Cobb Law Group does not do much work in Magistrate Court, but you can find out more information by clicking here:

http://www.georgiacourts.org/councils/magistrate/video.html

If you choose to pursue your claim in Magistrate Court, you are still required to file your Notice of Filing of Action for Claim on Mechanics and Materialmen’s Liens, and we strongly suggest that you hire a Georgia Construction law firm to prepare this document on your behalf as it must meet statutory requirements and will require information relating to the current owner’s of the real estate which may be difficult to locate.

If you have any experience which you wish to share regarding your experience with perfecting liens or filing a lawsuit in one of Georgia’s Magistrate Courts, please leave a comment below.

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.

How Long do Mechanics & Materialmen’s Liens Remain Valid in Georgia?

Posted in Materialmen's Lien (enforcement),Materilamen's Liens,Notice of Action by Administrator on the April 20th, 2012

Potential clients regularly call us and ask how long a lien lasts in Georgia.  As is true in most areas of law, the short answer is “it depends.”

Georgia Liens are Valid for One Year: In Georgia, a Claim of Lien is valid for one year from the date that the lien is filed.  If the lien claimant files a materialmen’s lien and then doesn’t enforce its lien rights within the year, then the mechanics or materialmen’s lien will automatically expire.

How Lien Claimants Can Extend the Lien Beyond One-Year: If the lien claimant enforces its rights before the one-year anniversary of the filing of the original construction lien, then the lien will continue to be valid.  How does a Georgia Lien Claimant enforce its rights?  Generally speaking, the Lien Claimant must (i) file a lawsuit against the party who owes them money, and they must (ii) file a Notice of Filing of Action for Claim on Mechanics and Materialmen’s Liens (“Notice of Action”).  Not only must these steps be done, but they must be done correctly and in compliance with the Georgia Mechanic’s and Materialmen’s Lien Act.  In order to do so, you will need a Georgia construction lawyer to help you meet all of the requirements.  If all of the necessary steps are taken in a timely manner, then the Claim of Lien does not expire and it continues in force beyond the one year anniversary of filing the lien.

Exceptions to Filing A Lawsuit: Sometimes, a mechanic’s Lien Claimant is prohibited from filing a lawsuit against the party who owes them money–this would most likely happen if the party who owed the money filed for bankruptcy protection.  This or any other scenario requires an experienced, Georgia Construction Lawyer in order to advise the Lien Claimant of the steps necessary to perfect and preserve its lien in Georgia.

How Can a Real Property Owner Shorten the Validity of a Construction Lien? Earlier, we advised that Georgia Liens are (initially) valid for one year from the date the lien was filed; if additional steps are not taken by the Lien Claimant, then the lien will expire.  The real property owner may file a Contest of Lien which shortens the time the Lien Claimant has to file its collection lawsuit, file the Notice of Action, etc. from the one-year anniversary to 60 days from the date of the filing of the Contest of Lien.  Of course, if the Georgia Lien Claimant meets its obligations to perfect its lien within this shortened period, then the Georgia Materialmen’s Lien survives and continues beyond the sixty day period.

Please contact the Cobb Law Group if you have any questions regarding the filing of Georgia liens, Georgia’s Construction Lien Laws, perfecting and enforcing liens in Georgia, or the expiration of liens in Georgia.

Don’t Let Your Georgia Construction Lien Expire–Enforce Your Rights Now!

Posted in Lien Foreclosure,Materialmen's Lien (enforcement),Notice of Action by Administrator on the March 9th, 2012

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!

How Do I Remove a Mechanic’s Lien from my Georgia Property?

Posted in Materilamen's Liens,Notice of Action by Administrator on the February 9th, 2012

How do I get a materialmen’s lien removed from my real estate title?  Before we address this great question, let me ask whether this question helps us predict the future economy:

Economic Recovery?  Before the current economic disaster, clients would call and say there was an old mechanic or materialmen’s lien against their property which they wanted to remove; then, when the economic breakdown occurred, we didn’t get many requests for this service due, in part, to the fact that no one was selling their real estate.  Lately, we have been getting more request to void liens in Georgia.  Does this mean people are slowly but surely beginning to sell their real estate?  I hope so!

Since Georgia’s Lien Laws were substantively changed in March 2009, the answer to the real question depends upon the date that the mechanic’s lien was filed.

How to Void Materialmen’s Liens filed before March 31, 2009: If a contractor or supplier filed a mechanics or materialmen’s lien against real estate prior to March 31, 2009 but he did not perfect his lien rights by (i) filing a lawsuit and (ii) filing a Notice of Action in the real estate records within one (1) year of the last day in which he worked on the construction project, then the real property owner may file a Request to Void Lien with the clerk of court in the county where the construction lien was filed.  In addition, a lawyer must search the county real estate records and certify that a Notice of Action was not filed by the lien claimant.  Prior to filing the Request to Void Lien and the Attorney’s Affidavit, the lien claimant must be sent copies of the documents to be filed.  All in all, it is a fairly straightforward means to have the lien voided, but you must hire a lawyer to assist you with this.  If you need to have a lien removed anywhere in the State of Georgia, please feel free to contact the Cobb Law Group to assist you!

How to Void Materialmen’s Liens filed after March 31, 2009: If a contractor or supplier filed a mechanics or materialmen’s lien against real estate after March 31, 2009, but he did not perfect his lien rights by (i) filing a lawsuit and (ii) filing a Notice of Action in the real estate records within one (1) year of the date that the construction lien was filed, then the lien automatically expires, and you do not need to hire a lawyer or make any requests of the clerk of court.  The Official Code of Georgia (O.C.G.A.) § 44-14-367 states:

. . . . . Any lien filed after March 31, 2009, shall include on the face of the lien the following statement 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.” Failure to include such language shall invalidate the lien and prevent it from being filed. No release or voiding of such liens shall be required. . . . . .

If you have any questions, please fee free to contact us at your convenience!

It’s Been a Year Since a Mechanics Lien was filed against my real estate–what happens to the lien?

Posted in Materialmen's Lien (enforcement),Materilamen's Liens,Notice of Action,Uncategorized by Administrator on the September 15th, 2011

Almost every day, we get great questions from clients and potential clients!  In the last few days, we have had several people ask us how to remove an expired lien in Georgia.  Unlike many questions, this question has a relatively simple answer.

Before revealing all of our secrets, let’s take a moment to look at the background.  In Georgia, Mechanic’s Liens and Materialmen’s Liens are filed in the real estate records in the county where the construction project occurred.  Thus, such a construction lien becomes part of the county’s public records and anybody with an interest can research the deed records and find the mechanic’s lien.  Even if the subsequently paid in full–and marked cancelled–the mechanic’s lien is a part of the public record.

Georgia views Mechanics Liens as clouds upon the real estate title.  Thus, property owners are usually concerned when a lien is filed against their real estate.  In fact, a properly filed mechanic’s lien will complicate many efforts of the real property owner.  For example, a lien will likely cause some issues if the real estate owner attempts to refinance or sell the property.

As regularly readers of this blog know, a lien is only valid for one-year from the date on which the lien was filed unless the lien claimant files a lawsuit (and meets other statutory obligations) before the year’s end.  Although many liens are not pursued by the lien claimant, the mechanic’s lien is still in the real estate records and the real property owners are concerned that it may still cloud their title.  Until the 2009 changes to Georgia’s lien law, they were right.  In fact, if there is a mechanic’s lien which was filed prior to March 31, 2009, then there is a procedure which the real property owner must go through to petition the court to have the lien marked void.

Mechanics Liens filed in Georgia after March 31, 2009 which are not perfected within 395 days automatically expire, and the real estate property owner does not have to take any affirmative action to have the lien removed.  If a lien claimant fails to commence a lien action to collect the amount of his claim within 365 days from the date of filing the claim of lien (or their failure to meet the other statutory requirements), then the claim of lien is unenforceable.  In fact, liens filed after the 2009 changes explicitly state “This claim of lien expires and is void 395 days from the date of filing of the claim of lien in no Notice of Commencement of lien action if filed in that time period” which lets all the world know that the lien is unenforceable.

If you are a real property owner who has lien placed against your property, we’d love to hear about your comments and experiences.

Notice of Filing of Action for Claim on Mechanis and Materialmen’s Liens–A PRIMER

Posted in Materialmen's Lien (enforcement),Notice of Action by Administrator on the April 13th, 2011

When a mechanics  or materialmen’s lien has been filed in Georgia, that lien remains valid for one year from the date that the lien was filed. For many of our clients that is enough time to settle the claim and get paid-perhaps they have negotiated a settlement, participated in arbitration or mediation, or received payment in full.  Unfortunately, that is not the case in every situation, and sometimes your debt is not resolved within one year.  So, if you are not paid within one year, how do you get your lien to continue beyond this one year statute of limitations?

In the simplest terms, Georgia requires that you must take two steps in order to keep your construction lien enforceable for longer than one year.  First, a lawsuit must be filed against the party who owes you money within one year of the date on which your lien was filed (“Lawsuit”).  This is typically a standard collection law suit.

Second, within 30 days of filing your Lawsuit, you must file a document officially called a Notice of Filing of Action for Claim on Mechanics and Materialmen’s Liens (which we frequently refer to as a “Notice of Action”).  The Notice of Action is filed with the real estate records where you filed your liens and must contain very specific information such as a cross-reference your original lien and detailed information related to your Lawsuit.  In addition, this Notice of Action must be served on the true owner of the real estate which was liened vie certified mail.  The purpose behind the Notice of Action is to let the owner know what is happening and it tells the world at large that you are enforcing your lien rights.  Thus, when someone is researching a title in the real estate records, they should discover that your lien was filed; if the lien is older than a year, then they will look for a Notice of Action and discover that your lien has been extended.

The Notice of Action is a necessary part of preserving your lien rights in Georgia.  If the Notice of Action isn’t filed timely (and other statutory requirements are not met) then you lien will probably be invalid.  Thus, it is very important that you chose a law firm familiar with Georgia’s lien requirements in order to enforce your rights.  Please contact us if we can help you in any way with either of these steps to help you enforce your lien.