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.