The Georgia Mechanics and Materialmen’s Lien Act creates a system of notices, which if used properly, provides a balance of protection for owners, contractors, subcontractors, sub-subcontractors and material suppliers working on construction projects. The statutory scheme is substantially affected by the relationship of contractual privity between various parties in the “chain of contracts.” Unfortunately, owners do not always appreciate their opportunities under this statute and subcontractors and suppliers do not always receive their payment.
Project Owners’ Rights: When a materialmen’s lien is wrongfully filed against a project, the owner of the real estate and the prime contractor involved in the project have rights. The rights vary from voiding the lien due to a technical deficiency to negotiating resolution with the lien claimant. Furthermore, to remove the lien owners may have options such as letting the lien automatically expire on one end to filing a suit for clouding title to the property or demand declaratory relief to remove the lien. One of the most-used options is the filing of a Notice of Contest of Lien. This filing reduces the lien claimant’s statute of limitation to perfect the lien to 60/90 days from the date of the filing of the Notice of Contest of Lien. Thus, if this avenue is utilized, then, it may be a cost-effective way to expedite the expiration of the lien (of course, if the lien claimant perfects the lien within the 90 day window, then the lien does not automatically expire). Please keep reading many commonly asked questions are addressed below:
Prevent Materialmen’s Liens From Being Filed: The Cobb Law Group attorneys understand Georgia’s strict lien laws from every perspective–including the Owner’s perspective as well as the lien claimant’s perspective. Project owners throughout Georgia regularly rely upon our expertise to assist them with every step of the construction process from negotiating and drafting the construction contract to taking steps to protect owners on the back-end by reducing the number of entities entitled to lien rights on the real estate, drafting joint check agreements, and filing Notices of Commencement. Because the owner has an obligation to make sure that its payments to the general contractor flow “down stream” to the subcontractors and suppliers, the property owner’s ability to limit exposure begins with its contract with the prime contractor. Frequently, when property owners come to us with materialmen’s liens placed against their project, we see that they missed an opportunity to effectively limit their losses (or maybe ameliorate them!) during their contract negotiation process. Clients who rely upon our legal experience and skills are less likely to have payment issues and liens–or threats of liens–placed against their property.
Lien Waivers: Georgia’s construction statutes recognize two types of enforceable lien waivers and releases: (i) Interim Waiver and Release Upon Payment and (ii) Final Waiver and Release Upon Payment. Using the correct form at the right time can prevent many problems which might surface later. For example, Georgia lien claimants must file their claim of lien within 90 days of the last day in which they worked on the project; a proper lien waiver, however, effectively shortens this period to 60 days from the date of the lien waiver. It is vital that a project owner employs a knowledgeable construction attorney to help them with each milestone towards completing their project.
What Happens If I Hear that a Subcontractor/Supplier Threatens to File a Lien? If an owner or project developer learns that a subcontractor or supplier threatens to file a materialmen’s lien, then the owner or project developer has a great opportunity to potentially resolve the situation at a substantially lower cost than might be faced later. If, for example, a supplier is not receiving payment, then an owner may consider utilizing lien waivers, joint check agreements or other resources suggested by an experienced construction attorney to quickly and efficiently remedy the situation.
Contractor Affidavits: In Georgia, it is possible for a Contractor’s Affidavit to defeat materialmen lien claims; however, just securing an affidavit is not enough. The affidavit must meet very specific requirements and the project owner must not have any knowledge of the potential claim. Fully understanding the usefulness (and pitfalls) of Georgia contractor affidavits is another component demonstrating our complete representation of project owners and developers.
What Happens If a Lien is Filed: Real Property Owners who have claims of lien placed against their real estate require an experienced and knowledgeable construction lawyer who is familiar with all of the requirements necessary to determine whether a claim of lien is valid as well as one who knows the options available to project owners to minimize the impact that a lien may have on their work. When a property owner asks us to help them remove a lien in Georgia, we first assess the validity of the lien. All mechanics and materialmen’s liens filed in Georgia must strictly adhere to the requirements of the lien statutes. Consequently, we initially explore such areas as the lien form used by the claimant, whether statutory notices were adequately provided, whether the work performed (or the materials supplied) qualify for inclusion in a lien amount, as well as every other component required by Georgia’s lien laws.
If the construction lien appears valid on its face, our experienced lien contest attorneys begin looking at the various contracts in place, the flow of payments down stream and attempt to determine liability. Furthermore, there are opportunities to reduce the impact of the lien by filing a Notice of Contest of Lien and/or filing declaratory relief actions to have invalid liens removed from the real estate chain of title.
What is a Notice of Contest of Lien? In Georgia, materialman liens are generally valid for 395 days from the date that the lien was filed (they may be extended beyond this date if the lien claimant perfects the lien). Georgia’s lien law gives property owners the opportunity to substantially reduce this 395 day period by filing a Notice of Contest of Lien. If a Notice of Contest is property filed, then the lien claimant must perfect the lien within 60 days of the filing of a valid Georgia Notice of Contest of Lien; otherwise, the lien against the property expires. This can be a very useful tool to property owners to clear title to their real estate, and is an option which we explore with our clients. Of course, in addition to filing a Notice of Contest of Lien, property owners have other rights and tools at their disposals. To learn more about some of these tools, please click here > >
Construction Arbitration and Mediation: Construction contract litigation and lien litigation can be very expensive; thus, it is frequently less costly, more efficient, and more civilized to submit construction and lien disputes to arbitration or mediation. Our lawyers have as much experience handling disputes through alternative dispute resolution mechanisms such as arbitration and mediation as they do in the courtroom. In fact, one of our attorneys and one of our paralegals are registered third-party neutrals to conduct construction arbitration and mediation.
Contact Us Today: If you are a project owner or project developer facing a Georgia construction project with liens or threatened with liens, please contact us today via email or telephone (770-886-5890) to see how we can help you.