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!