by Mark Cobb
We are excited to report that earlier this week, Georgia’s Governor Nathan Deal signed HB 434 into law thereby amending our state’s lien statute to allow lien claimants to include the amount due and owing the lien claimant under the terms of an express or implied contract, subcontract, or purchase order as well as interest on the past due balance. We’ve written more extensively about the 2013 amendment to Georgia’s lien laws, but we wanted to follow-up with our readers and let you know that the bill is now law. Thank you Gov. Deal.
If you have any questions regarding the changes to our state’s lien laws or if you have any other questions regarding construction liens, payment bonds, Miller Act claims or construction contracting in Georgia, please contact the lawyers at the Cobb Law Group by email or call us at (866) 960-9539 today!
(UPDATED MAY 9, 2013) GOVERNOR SIGNED HB 434 INTO LAW; click here for more information!
(UPDATED APRIL 10, 2013) TO SEE THE LATEST INFORMATION ON THE PENDING CHANGES TO GEORGIA’S LIEN LAWS, PLEASE SEE OUR FOLLOW-UP BLOG ENTRY BY CLICKING HERE.
As the current session of the Georgia legislature winds down, we want to send our kudos to Rep. Tom Weldon, Wendell Willard and Mike Jacobs for supporting HB 434 which attempts to amend Georgia’s Mechanic’s and Materialmen’s Lien Law. The proposed amendment will allow Georgia’s contractors, specialty subcontractors and material suppliers to specifically include pre-judgment interest, General Condition Costs and other sums due under their contract as lienable items. This proposed bill is in direct response to a recent court decision which negatively impacted construction professionals by excluding General Condition Costs as a lienable item in Georgia.
Specifically, HB 434 amends O.C.G.A. Section 44-14-361 to include the following specially crafted language for new subsection (c):
(c) Each special lien specified in subsection (a) of this Code section shall include:
(1) The amount due and owing the lien claimant under the terms of its contract, subcontract, or purchase order; or
(2) In the absence of a contract, subcontract, or purchase order, the unpaid value of the labor, materials, and services provided by the lien claimant for the improvement of the real estate. Such lien shall include interest on the principal amount due in accordance with applicable law.
To see a copy of HB 343, click here. Currently, the bill is with the Senate Judiciary Committee. We will keep you informed as this issue progresses.
by Mark A. Cobb
Our construction law colleagues at Kaplin Stewart maintain a very good Pennsylvania construction law blog, and a recent posting by them gives a very important warning to architects, engineers and builders who consider cutting corners to save money. Apparently, an owner/designer of luxury house in Hollywood Hills, California has been charged with involuntary manslaughter after his house caught fire resulting in the death of a firefighter. The builder’s negligent construction technique has been alleged as the proximate cause of the fireman’s tragic death.
The home’s owner, who was also the designer and general contractor, was building the California house in order to shoot the television show “Germany’s Next Top Model”. During the building process, however, he apparently (i) lied about his intentions to install fireplaces in his new home and, subsequently, (ii) used fireplaces designed exclusively for exterior use for his interior. The misappropriated fireplaces, consequently, caused the fire, and, tragically, a fireman was killed trying to put out the inferno.
Los Angeles County prosecutors allege that “grossly negligent construction” led to the fire and the firefighter’s death. Thus, they decided to prosecute the builder/owner.
The warnings conjured by these events are obvious, but they bear repeating.
First, defective construction can harm and even kill innocent people. In this case, a brave firefighter’s life was lost unnecessarily, and this loss, no doubt, impacts the firefighter’s family and friends tremendously. There are too many similar scenarios where defective building techniques have lead to collapses, cave-ins, fires, floods, and other calamities.
Second, efforts to cut-corners and save money at the beginning of a project frequently result in significant damages down the road. In this case, the property has been destroyed, the shooting location of the tv series has been changed, and, the owner/builder faces serious criminal charges and the incumbent attorneys fees surrounding his defense. In addition, the owner may face civil damages in the event that the fireman’s family pursues their own claim against him.
Third, products have individual and specific uses. Do not misuse your construction materials. Do not skimp on quality or quantity if you want to have a building with integrity.
Fourth, do not lie or mislead building inspectors. Although many people quickly tire of government involvement and fees, the inspector’s job is ultimately to ensure safety and quality. This is particularly important in historic states like Georgia. We have many historic houses from the antebellum and Victorian eras, and, thankfully, there are many Georgia communities where these architectural treasures are cherished and restored. There are times, however, when an inspector’s goal and a preservationist’s goal differ, and an inspector might be shown an allegedly completed project which, subsequently, gets changed after the inspector’s departure. Be careful! And, know that you might be liable for these subsequent alterations.
Please, build safely and responsibly.
We are pleased to let our readers know that The Thomasville Townie named our Georgia Construction, Lien & Bond Law blog as one of its favorite local blogs. Thanks Townie!
For those of you who don’t know, The Thomasville Townie is our community’s patron saint of all things good about Thomasville, Georgia. The Townie keeps the pulse of our historic town, keeping all of the citizenry informed of upcoming events, local economic development, historical and cultural information as well as throwing out braining-storming ideas that hope to enrich all of our lives. We are very fortunate to have The Townie as a voice in our community!
The Townie maintains a runners pace with a website and non-stop facebook posts about all the exciting activities in our slice of Georgia. Recently, The Townie expanded its electronic reach to include a print newspaper published every Friday; this great new publication is distributed free to readers at some of our area’s best retail and restaurant locations (make sure you pick up your copies). In addition to articles, events and advertising, there are usually proverbs about wisdom and life, fun facts, and local glamour.
Imagine our delight and surprise when reading the current edition last Friday evening when we saw a highlighted box listing “Local Bloggers We Love”; among the 6 terrific blogs listed was our blog–how wonderful! It’s particularly nice because the other blogs, as you can imagine are wonderful, lush blogs about local culture and fun stuff about Thomasville–admittedly, our blog is dryer and not as universally applicable as the other blogs. Regardless, it’s an honor to be included in such an august list.
We’ll try our best to continue to bring our readers everything pertinent about construction law, materialmen’s liens and payment bonds in Georgia! In addition, we highly recommend the other blogs on the list, and we invite you to check them out for yourselves:
by Mark A. Cobb
In two previous blog installments (click here for Part I, click here for Part II, click here for Part IV, click here for Park V on remedies and defaults) we began a discussion on key issues in joint venture agreements. Although, our comments are not limited to construction contracting in Georgia, our construction attorneys are experienced in drafting and negotiating joint venue contracts and, now, we continue our series with a discussion on key issues related to the internal management of a joint venture.
There are, frequently, three components to the internal management of a joint venture:
1. the Executive Committee;
2. the Joint Venture Management Team; and/or
3. the Project Manager.
JV Executive Committee: Every joint venture agreement needs an Executive Committee which has the final word on management issues; typically, the Executive Committee is comprised of a set number of representatives appointed by each party to the joint venture agreement.
JV Executive Committee Voting: Although it may not always be possible, the goal of the Executive Committee should be to make all decisions unanimous. In the absence of unanimity, committee votes are usually weighted by the percentage interest of each participant. Thus, if there are two joint venturers each with a fifty percent interest in the joint venture, you need to make certain that a mechanism is built into your document to prevent deadlocks on issues. Many JV agreements wisely set forth a list of certain actions which require unanimous consent of the committee members.
Executive Committee Duties: Although their duties vary on each specific project, one essential aspect of the Executive Committee is the overseeing of the distribution of profits (or other assets upon termination); although the Executive Committee members are not typically involved in the day-to-day running of the venue, the must stay up-to-date on the project and its progress.
Joint Venture Management Team: The management team consists of specific individuals from each of the venture participants, and they are closer to the trenches than the Executive Committee. The Executive Committee has oversight of the management team, but the management team has direct charge and supervision of the performance (and the completion) of the project! They should periodically provide the Executive Committee with financial reporting and cost accounting and pertinent tax matters.
Project Manager: The project manager is usually identified in the joint venture agreement, but he or she is always subject to replacement by the Executive Committee; similarly, the project manager is usually an individual, but there are companies which specialize in project management, and they may be hired for this position. Needless to say, the Project Manager has the most hands-on duties as it related to the construction performance and issues; thus, his duties are frequently detailed in the joint venture agreement and may include the following:
- responsibility for carrying out the work
- budget preparation
- contact with the project owner; and
- some overlap with the management team duties.
Georgia contractors regularly utilize the benefits of joint ventures to meet the demands of specific projects; prior to entering into a joint venture, however, it is vital to consult an experience Georgia construction contracts attorney. If you have any questions about your next joint venture agreement, please do not hesitate to contact us!
Also, please leave us a comment about management issues you have encountered in your joint ventures with others!
by Mark A. Cobb
A recent Georgia Court of Appeals holding may give some subcontractors and suppliers reason to rejoice. In Pinnacle Props. V, LLC v. Mainline Supply of Atlanta, LLC, 735 S.E.2d 166 (Ga. Ct. App. 2012), the court held that a materialmen’s lien placed against a construction project on a development corporation’s real estate was valid and could be enforced.
Background: Mainline Supply of Atlanta, LLC, a construction material supplier, provided pipes, valves and similar materials for use on a construction project in Cobb County, Georgia. This project was an office building being constructed by Pinnacle Properties on real estate owned by the Kennesaw Georgia Development Authority. Originally, the real estate had been owned by Pinnacle Properties, but it was deeded to the Development Authority and leased back to Pinnacle Properties. After the general contractor failed to pay Mainline Supply for its building materials, Mainline Supply filed a Georgia Mechanics and Materialmen’s Lien against the Pinnacle Properties project and the Kennesaw Development Authority.
The Development Authority’s Argument: Although the materialmen sued the development authority (along with Pinnacle Properties), the trial court found that the documents which the parties had signed transferring ownership of the real estate between them severed the ownership of the land and ownership in the building. Thus, the lower court determined that the local development corporation had no ownership interest in the building, but it held that the development authority held a fee simple interest in the land; conversely, the lower court held that Pinnacle Properties held a usufruct (a license to use) in the land, but had “title” to the improvements. Consequently, the Kennesaw Development Corporation was dismissed as a party.
The Material Supplier’s Argument: It is well established that a materialman’s lien may attach to the interests of a “true owner,” that is, someone who has an estate or property interest in realty; but it will not attach to a usufruct, which does not convey an ownership interest and is not subject to levy and sale. Thus, while Pinnacle Properties argued that its rights were a mere usufruct and not subject to a lien, the material supplier argued that Pinnacle Properties had title to the building. Construction lawyers for the material supplier argued that the documents executed between Pinnacle Properties and the development authority severed ownership of the building from ownership of the land.
All of the parties conceded that, typically, any buildings placed upon the land of another–even if they are placed on the property by someone entitled to use the real estate–become part of the realty, and the title to the buildings becomes vested in the owner of the land. However, the supplier argued, this rule may be altered by agreement, and, by looking at the land-exchange documents, the supplier argued that the parties clearly intended to create a special agreement wherein Pinnacle Properties would have a fee-simple interest in the improvements.
The Georgia Court of Appeals Holding: The Georgia Court of Appeals rejected both Pinnacle’s argument that its interest was a mere usufruct and Mainline Supply’s argument that Pinnacle retained a fee-simple interest in the improvements. Nonetheless, the Court opined that an estate for years carries with it the right to use the property in as absolute a manner, and an estate for years may be subjected to the lien. Thus, the Court held that, “Even if Pinnacle does not have title to the building on which the lien is claimed and title is in a third party not subject to the suit, this “will not bar an action for foreclosing the statutory lien of a materialman because if the defendant has any interest in the premises upon which the lien can take effect, that interest is bound. Every legal interest in real and personal property can be seized and sold. Here, Pinnacle had an estate for years in the leased premises, and a materialman’s lien could attach to and be enforced against such interest, subject to the conditions of the lease.”
Summary: Even if the building owner did not have title to the building on which the lien was claimed and title was in a third party not subject to the suit, this would not bar an action for foreclosing the statutory lien of a materialman because if the defendant had any interest in the premises upon which the lien can take effect, that interest was bound.
Georgia Claim of Lien Laws: If you need to file a construction lien anywhere in the state of Georgia, it is vital that it be filed against the proper parties and that all of the deadlines and statutory requirements be met; thus, we encourage you to contact a qualified Georgia Materialmen’s Lien Attorney to help you with your claim of lien. If you have any questions or have any lien claims or bond claims in Georgia, please feel free to contact us or leave your comments below!
The construction lawyers at the Cobb Law Group welcome guest blogger and health advocate, Brian Turner to our Georgia Construction, Bond & Lien Law Blog. He warns about the health and safety concerns that one should keep in mind while doing home renovations or DIY projects as exposure to certain materials can cause harm to yourself and family members.
Home renovations may put homeowners at risk of exposure to dangerous chemicals and toxic substances. Homeowners are at risk of respiratory illnesses related to exposure to substances like asbestos or the fumes from paints or cleaning agents. Other risks are tied to the building materials selected for the renovation projects. For the do-it-yourself crowd, little may be known about working with certain types of building materials in home renovation projects. One popular building material is vinyl siding and it comes with its share of risks that people should be aware of when working with popular material.
Vinyl materials in construction
Vinyl siding is commonly marketed as a green product that is fire retardant. Its wide use in the construction industry is tied to how affordable the composite materials. Vinyl siding contains poly vinyl chloride and is one of the most common synthetic materials available. It is used externally for wall cladding and internally for interior finishes. In recent years, vinyl is used internally in the temporary housing units for Katrina victims put occupants at risks. Those temporarily relocated to the trailers ended up being stuck in the units for a longer time than originally planned and became sick when the units became too hot. The vinyl components of trailer units were the flooring and cabinets. When the heat became intense, formaldehyde was released into the air and inhaled by the Katrina evacuees. In home renovation, PVC vinyl siding products may not be suitable for locations where the heat can become a problem.
Mold and Vinyl
As an alternative to other commonly used building products, vinyl is chosen because of its durability. It is less likely to rot than other types of building materials. One downside to vinyl is that it can attract mold. The small crevices on the surface of the material make it vulnerable to mold. During the spring and fall, the risks for developing a mold problem is greater. During the spring, there is more moisture and in the fall there is less sunlight. Mold problems can cause respiratory problems if not eliminated and removed regularly. Vinegar is a great cleaning agent for mold removal. Tougher mold conditions may warrant the use of bleach products. When mold is detected, it should be removed immediately.
Vinyl and flooring
When the home renovation project is being considered, the condition of the flooring should be evaluated. Older homes may have vinyl flooring. As long as the floors are in good condition, the vinyl flooring may pose limited risks to the occupants of the home in most cases. If not being replaced, the flooring tiles should be cleaned by buffing with a machine with a 300 RPM to avoid damaging the tiles. Some of the older homes may contain vinyl flooring products that contain asbestos. The vinyl flooring products may contain asbestos materials. Individuals who are considering removing their vinyl flooring due to asbestos should be cautious to avoid violating the Clean Air Act, which requires that experts be used to handle the removal process.
Vinyl products used in home renovation projects should be carefully considered before being incorporated into the building project. In homes with vinyl building materials, proper cleaning techniques should be employed to minimize safety risks.
by: Mark A. Cobb
When I meet people it can be difficult to share with them what I do. If I simply admit to being a “lawyer” then I have probably shut down the conversation, but if I tell my listener that I am a “business lawyer” or a “construction lawyer,” then I might get a follow-up question or two. Unfortunately, neither of these terms really express my legal specialty as a Georgia Subcontractor Lawyer.
Business Lawyer: Being a Georgia Subcontractor Lawyer means that I represent businesses many of which are associated with the construction industry. It means that we help create and organize new businesses, we assist with business licensure, commercial lease negotiation, franchise documents, purchase money security interests, contracts, mergers & acquisitions, and payment issues.
Construction Lawyer: Being a Georgia Subcontractor Lawyer also means that we work with unique contract drafting methods and dispute resolution methods which are unique to construction law; these unique features are based on many factors including multiple contractual relationships, unforeseeable but necessary contract amendments, changes and additions due to weather delays, construction site issues, as well as unique (but very beneficial) collection avenues including materialmen liens, payment bonds, and Miller Act litigation.
Unique Subcontractor Issues: Thus, it might be said that Subcontractor Law is a combination of business law and construction law. It is, but it is simulataneouly much more than that. Georgia’s lien laws on private projects and Georgia’s payment bond laws on public projects have specific statutes governing Georgia subcontractors and suppliers which do not apply to general construction contractors, architects, engineers and real estate developers. Furthermore, there are contract terms and notice requirements which are unique to subcontractors. Issues such as “paid-when-paid”, “paid-if-paid” and Prompt Payment Acts impact this class of construction professionals.
Suppliers Too! To further complicate matters, the term Subcontractor Law is also applicable to businesses which supply materials to construction projects. Thus, we regularly represent manufacturers, wholesalers and retailers of products (or services) used on a construction project. This includes everything from site-preparation work, to roofing materials, lighting fixtures and bathroom dividers. Thus, we have to know a lot about our client’s businesses, their distribution, and their contracts or open accounts.
These are just some of the reasons why it is difficult for me to succinctly share with others the fascinating world of my business/construction/subcontractor/supplier law practice. Marketers stress the importance of being able to share your expertise in a quick sound-bite, but until there is a more accurate term for this legal specialty, Georgia Subcontract Lawyer is the best description there is.
Of course, there was an old Cosby episode in which Dr. Cosby was asked by a car salesman, “What type of work do you do?” To this, the affable Bill Cosby quipped, “I work hard” without disclosing the details of his vocation. Maybe I should just try this!
If you need a Georgia Business, Franchise, Construction, Manufacturer, Subcontractor or Supplier law, contact us today!
- Average bid-to-win ratio (i.e., percent of projects you win out of those you bid on)
- Top estimating errors and challenges
- Average time to turn around a bid
- Top estimating priorities for 2012
Happy New Year!
With the start of the new year, we are committed more than ever to providing quality legal services at fair and competitive rates. The Cobb Law Group’s virtual law platform is growing by leaps and bounds to provide clients with unbundled legal services at very affordable rates. Today, we added more Georgia legal forms, and there will be many more added in the near future.
If you need to send a Notice to Contractor (also called a Notice to Owner or an “NTO”) in Georgia, then you’ll really appreciate these forms. In case you aren’t familiar with NTO’s, they are written notices that all third-tier suppliers and subcontractors must send within the first 30 days that they supply or work on the project. If the third tier supplier or subcontractor fails to send this notice, then they may not be able to file a mechanic or materialmen’s lien or make a payment bond claim.
If you need a form just follow this link to purchase Georgia Notice to Owner (NTO) forms.