Saturday, March 7, 2009

The New Mechanic's Lien Law :: And Its New Put Up or Shut Up "Notice of Contest" Rule

Mechanic's liens are important and subcontractors and materialmen must get paid for legitimate work they do on real property. However, there are other "gray area" mechanic's liens. Those are the ones your client calls you about and says, "We just found a lien on our property for the installation of pool cleaning equipment, but we don't own a pool" [1] The "gray" liens will not survive under the new law.

For years, perhaps a century or more, property owners, homeowners and commercial owners, have been held hostage by undefined, vague, unknown and "willy nilly" mechanics liens. The new "Notice of Contest," Form and built-in lien expiration dates will prevent this harm. Property owners will now be able to "join the issue" within sixty (60) days or the lien will expire.

I. Omnibus Changes Associated with the New Law

From reading the new law [2], my guess is we will see changes in three (3) areas: 1) the volume of lien suits will rise, due to the "notice of contest" provisions, 2) the cost to bond around mechanic's liens will rise significantly, and 3) plenty of lien filers will die on the vine under the new two (2) day Notice Provision.

Lien laws are a derogation of common law and must be strictly construed. That means, if you fail to follow the letter of the statute you get - no lien. Many claimants and practitioners had difficulty with the old law; the new law has some new and interesting pitfalls of its own.

Mechanics and Materialmen have a special lien on the real property until they are paid. [3] Generally, the lien runs in favor of: contractors, subcontractors, materialmen furnishing material to subcontractors, laborers to subcontractors, architects, foresters, land surveyors, professional engineers, [ * * * ] and suppliers of rental tools. Id.

The old mechanic's lien law provided that the lien must be filed within 3 months of the last work or last supply of materials to the jobsite and that suit was to be filed, if at all, within 12 months from the last work. [4] The new lien law, thankfully, tracks this date from the date of the filing of the lien at the courthouse, not the vague date the subcontractor last worked (supplier last delivered to) on the property.

II. Technical Changes Associated with the New Law

The new Mechanic's Lien law generally allows the creation of the lien in the same format as the old law.

The main changes are: If the owner (homeowner, commercial property owner) bonds around or bonds off the lien, the new statute requires that the lienholder be notified. Notice was not required under the old statue. The dates are more completely defined. Three months to file has been changed to "90" days to file. Under the new law, the lienholder has only two (2) days to forward the notice of lien by certified mail or overnight courier to the owner. The old law stated, notice had to be given, but no date was specified.

Under the old law, a lienholder had one year to file suit from the last work or delivery of material. Under the new law, the lienholder has 365 days from the filing the lien in the courthouse. The filing of the Notice of the Lawsuit has been extended to 30 days from 14 days. There are also substantial changes to the Interim Waiver of and Release Upon Payment. [5] The new law also mandates that notice be sent to the owner of the property and to the contractor, if a notice of commencement has been filed by the contractor. The new law clarifies a defect in the old law. The mechanic's lien must now state when it expires or state the last date by which suit must be filed.

Property Owners get a new tool, the "Notice of Contest." Now an owner, homeowner, or commercial property owner, may immediately challenge the filing of the lien by forwarding a "Notice of Contest," to the individual or entity that filed the lien. The Notice of Contest is no mere impotent filing. It "joins the issue," so to speak. The Lienholder's time to sue drops by 10 months. The lienholder must sue within 60 days or the lien expires.

III. Areas of Impact

While these are this author's impressions only, my guess is we will see the volume of lien suits rise. The reason for the increase in lien suits will be associated with the Notice of Contest. If the mechanic's lienholder must sue or lose it, many more suits will be commenced to preserve the lien.

It will be interesting to see if one of the old tried and true litigation letters, the "tolling agreement," migrates to this new area of lien law. If the property owner and lien holder are still negotiating on the 59th day, it may be more cost effective to enter into a tolling agreement, than proceed with suit. The other option is to file, and then extend the time to answer.

I expect we will see bonding prices rise. Presently the bond companies (which are not legion), have factored into their rates the low number of suits that are filed a year after the work. Now with the new 60 day acceleration rule and the mandatory notification to the property owner, the bonding company is going to be immediately in the subcontractor’s gunsites. Would a client be more likely to sue a bonding company than the homeowner? Absolutely. If subcontractor proves its lien by suit, the bonding company is sitting on the pot of gold. With the property owner, the lienholder still faces the nightmare of colleting out of the property owner or foreclosing on the property. And the lien is generally subordinate to a junior to a first security deed bank.

Bonding companies will become the new hunted bounty under this new law - and, correspondingly, they should raise the bonding premium to reflect the new risk.

New motion practice will arise over whether the notice was mailed within two (2) days. While it seems black and white, I assure you this provision will not be clear after about the 3rd Georgia Court of Appeals opinion is handed down on this issue.

If the subcontractor files late, "too bad, he should have hired a lawyer." If the lawyer files late, it's a different story. Lawyers best get use to this new killer provision or be prepared to call their E&O carrier. Two days (2) is one of the shortest statutes known to man. [And, I thought the time a tenant had to answer a dispossessory was short. This make the "shorter than 11 days," in federal court look like an eternity. F.R.C.P. 6(a)(1)] Think about it. If you (a lawyer) file on a Thursday afternoon and get distracted over a long weekend, the lien is probably dead by the time you get it in the mail. Go explain to your client that you flushed his $92,000 mechanic's lien down the toilet because the lien filing is still in your briefcase. [6]

VI. Conclusion

Overall, the changes in the Mechanic's Lien Law should be a welcome change of defined dates and defined notices. The old law was vague and undefined and probably caused many subcontractors to miss the one year filing deadline. The new notice provisions, and "notice of contest," will cause more suits to be filed. Lawsuits against bonding companies will increase, bonding premiums will increase and the two (2) day Notice Provision will generate a number of "Lien or No-Lien" lawsuits.

Hugh Wood
Atlanta, Georgia

Wood & Meredith, LLP
3756 Lavista Road
Suite 250
Tucker, GA 30084



Endnotes:

[1]

Donovan Donaly: "Excellent. Well, let's get right down to it, then, shall we? We'll take a couple of vacuum hoses. We probably need a new filter round about now. Maybe... Wait a minute, darling. Do we actually have a swimming pool?" Intolerable Cruelty (2003)

[2]

OCGA § 44-14-361.1. [Effective 3/31/2009] How Liens Declared And Created; Record; Commencement Of Action; Notice; Priorities; Parties; Limitation On Aggregate Amount Of Liens.
(a) To make good the liens specified in paragraphs (1) through (8) of subsection (a) of Code Section 44-14-361, they must be created and declared in accordance with the following provisions, and on failure of any of them the lien shall not be effective or enforceable:
(1) A substantial compliance by the party claiming the lien with his or her contract for building, repairing, or improving; for architectural services furnished; for registered forester services furnished or performed; for registered land surveying or registered professional engineering services furnished or performed; or for materials or machinery furnished or set up;
(2) The filing for record of his or her claim of lien within 90 days after the completion of the work, the furnishing of the architectural services, or the furnishing or performing of such surveying or engineering services or within 90 days after the material or machinery is furnished in the office of the clerk of the superior court of the county where the property is located. The lien shall include a statement regarding its expiration pursuant to Code Section 44-14-367 and a notice to the owner of the property on which a claim of lien is filed that such owner has the right to contest the lien; the absence of such statement or notice shall invalidate the lien. The claim shall be in substance as follows:
'A.B., a mechanic, contractor, subcontractor, materialman, machinist, manufacturer, registered architect, registered forester, registered land surveyor, registered professional engineer, or other person (as the case may be) claims a lien in the amount of (specify the amount claimed) on the house, factory, mill, machinery, or railroad (as the case may be) and the premises or real estate on which it is erected or built, of C.D. (describing the houses, premises, real estate, or railroad), for satisfaction of a claim which became due on (specify the date the claim was due, which is the same as the last date the labor, services, or materials were supplied to the premises) for building, repairing, improving, or furnishing material (or whatever the claim may be).'
No later than two business days after the date the claim of lien is filed of record, the lien claimant shall send a true and accurate copy of the claim of lien by registered or certified mail or statutory overnight delivery to the owner of the property or, if the owner's address cannot be found, the contractor, as the agent of the owner; provided, however, if the property owner is an entity on file with the Secretary of State's Corporations Division, sending a copy of the claim of lien to the entity's address or the registered agent's address shall satisfy this requirement. In all cases in which a notice of commencement is filed with the clerk of the superior court pursuant to subsection (b) of Code Section 44-14-361.5, a lien claimant shall also send a copy of the claim of lien by registered or certified mail or statutory overnight delivery to the contractor at the address shown on the notice of commencement;
(3) The commencement of a lien action for the recovery of the amount of the party's claim within 365 days from the date of filing for record of his or her claim of lien. In addition, within 30 days after commencing such lien action, the party claiming the lien shall file a notice with the clerk of the superior court of the county wherein the subject lien was filed. The notice shall contain a caption referring to the then owner of the property against which the lien was filed and referring to a deed or other recorded instrument in the chain of title of the affected property. The notice shall be executed, under oath, by the party claiming the lien or by such party's attorney of record, but failure to execute the notice under oath shall be an amendable defect which may be cured by the party claiming the lien or by such party's attorney without leave of court at any time before entry of the pretrial order and thereafter by leave of court. An amendment of notice pursuant to this Code section shall relate back to the date of filing of the notice. The notice shall identify the court or arbitration venue wherein the lien action is brought; the style and number, if any, of the lien action, including the names of all parties thereto; the date of the filing of the lien action; and the book and page number of the records of the county wherein the subject lien is recorded in the same manner in which liens specified in Code Section 44-14-361 are filed. The clerk of the superior court shall enter on the subject lien so referred to the book and page on which the notice is recorded and shall index such notice in the name of the then purported owner as shown by the caption contained in such notice. A separate lis pendens notice need not be filed with the commencement of this action; and
(4) In the event any contractor or subcontractor procuring material, architect's services, registered forester's services, registered land surveyor's services, or registered professional engineer's services, labor, or supplies for the building, repairing, or improving of any real estate, building, or other structure shall abscond or die or leave the state during the required time period for filing a lien action, so that personal jurisdiction cannot be obtained on the contractor or subcontractor in a lien action for the services, material, labor, or supplies, or if the contractor or subcontractor shall be adjudicated a bankrupt, or if, after the filing of a lien action, no final judgment can be obtained against him or her for the value of such material, services, labor, or supplies because of his or her death, adjudication in bankruptcy, or the contract between the party claiming the lien and the contractor or subcontractor includes a provision preventing payment to the claimant until after the contractor or the subcontractor has received payment, then and in any of these events, the person or persons furnishing material, services, labor, and supplies shall be relieved of the necessity of filing a lien action or obtaining judgment against the contractor or subcontractor as a prerequisite to enforcing a lien against the property improved by the contractor or subcontractor. Subject to Code Section 44-14-361, the person or persons furnishing material, services, labor, and supplies may enforce the lien directly against the property so improved in a lien action against the owner thereof, if filed within the required time period for filing a lien action, with the judgment rendered in any such proceeding to be limited to a judgment in rem against the property improved and to impose no personal liability upon the owner of the property; provided, however, that in such lien action for recovery, the owner of the real estate improved, who has paid the agreed price or any part of same, may set up the payment in any lien action brought and prove by competent and relevant evidence that the payments were applied as provided by law, and no judgment shall be rendered against the property improved. Within 30 days after filing such lien action, the party claiming the lien shall file a notice with the clerk of the superior court of the county wherein the subject lien was filed. The notice shall contain a caption referring to the then owner of the property against which the lien was filed and referring to a deed or other recorded instrument in the chain of title of the affected property. The notice shall be executed, under oath, by the party claiming the lien or by his or her attorney of record. The notice shall identify the court or arbitration venue wherein the lien action is brought; the style and number of the lien action, if any, including the names of all parties thereto; the date of the filing of the lien action; and the book and page number of the records of the county wherein the subject lien is recorded in the same manner in which liens specified in Code Section 44-14-361 are filed. The clerk of the superior court shall enter on the subject lien so referred to the book and page on which the notice is recorded and shall index such notice in the name of the then purported owner as shown by the caption contained in such notice. A separate lis pendens notice need not be filed with the commencement of this action.
(b) As between themselves, the liens provided for in Code Section 44-14-361 shall rank according to the date filed; but all of the liens mentioned in this Code section for repairs, building, or furnishing materials or services, upon the same property, shall, as to each other, be of the same date when declared and filed for record within 90 days after the work is done or before that time.
(c) The liens specified in Code Section 44-14-361 shall be inferior to liens for taxes, to the general and special liens of laborers, to the general lien of landlords of rent when a distress warrant is issued out and levied, to claims for purchase money due persons who have only given bonds for titles, and to other general liens when actual notice of the general lien of landlords and others has been communicated before the work was done or materials or services furnished; but the liens provided for in Code Section 44-14-361 shall be superior to all other liens not excepted by this subsection.
(d) In any proceeding brought by any materialman, by any mechanic, by any laborer, by any subcontractor, or by any mechanic of any sort employed by any subcontractor or by any materialmen furnishing material to any subcontractor, or by any laborer furnishing labor to any subcontractor, to enforce such a lien, the contractor having a direct contractual relationship with the subcontractor shall not be a necessary party; but he or she may be made a party. In any proceedings brought by any mechanic employed by any subcontractor, by any materialmen furnishing material to any subcontractor, or by any laborer furnishing labor to any subcontractor, the subcontractor shall not be a necessary party; but he or she may be made a party. The contractor or subcontractor or both may intervene in the proceedings at any time before judgment for the purpose of resisting the establishment of the lien or of asserting against the lienor any claim of the contractor or subcontractor growing out of or related to the transaction upon which the asserted lien is based.
(e) In no event shall the aggregate amount of liens set up by Code Section 44-14-361 exceed the contract price of the improvements made or services performed.
(f) The filing fees for a claim of materialman's or mechanic's lien and any related document created pursuant to this Code section, including but not limited to a notice of commencement of action, shall be the amount set by Code Section 15-6-77 for liens on real estate and personal property.
History. Amended by 2008 Ga. Laws 766, § 2, eff. 3/31/2009.

[3]

Part 3. MECHANICS AND MATERIALMEN
Current through 2008 Legislative Session
OCGA § 44-14-361. Creation Of Liens; Property To Which Lien Attaches.
(a) The following persons shall each have a special lien on the real estate, factories, railroads, or other property for which they furnish labor, services, or materials:
(1) All mechanics of every sort who have taken no personal security for work done and material furnished in building, repairing, or improving any real estate of their employers;
(2) All contractors, all subcontractors and all materialmen furnishing material to subcontractors, and all laborers furnishing labor to subcontractors, materialmen, and persons furnishing material for the improvement of real estate;
(3) All registered architects furnishing plans, drawings, designs, or other architectural services on or with respect to any real estate;
(4) All registered foresters performing or furnishing services on or with respect to any real estate;
(5) All registered land surveyors and registered professional engineers performing or furnishing services on or with respect to any real estate;
(6) All contractors, all subcontractors and materialmen furnishing material to subcontractors, and all laborers furnishing labor for subcontractors for building factories, furnishing material for factories, or furnishing machinery for factories;
(7) All machinists and manufacturers of machinery, including corporations engaged in such business, who may furnish or put up any mill or other machinery in any county or who may repair the same;
(8) All contractors to build railroads; and
(9) All suppliers furnishing rental tools, appliances, machinery, or equipment for the improvement of real estate.
(b) Each special lien specified in subsection (a) of this Code section may attach to the real estate of the owner for which the labor, services, or materials are furnished if they are furnished at the instance of the owner, contractor, or some other person acting for the owner contractor and shall include the value of work done and materials furnished in any easement or public right of way adjoining said real estate if the work done or materials furnished in the easement or public right of way is for the benefit of said real estate and is within the scope of the owner's contract for improvements to said real estate.

[4]

Here is the OLD statute:

OCGA § 44-14-361.1. [Effective Until 3/31/2009]How Liens Declared And Created; Record; Commencement Of Action; Notice; Priorities; Parties; Limitation On Aggregate Amount Of Liens.
[Note: THIS STATUTE HAS BEEN SUPERCEEDED AS OF MARCH 31, 2009.]
(a) To make good the liens specified in paragraphs (1) through (8) of subsection (a) of Code Section 44-14-361, they must be created and declared in accordance with the following provisions, and on failure of any of them the lien shall not be effective or enforceable:
(1) A substantial compliance by the party claiming the lien with his contract for building, repairing, or improving; for architectural services furnished; for registered forester services furnished or performed; for registered land surveying or registered professional engineering services furnished or performed; or for materials or machinery furnished or set up;
(2) The filing for record of his claim of lien within three months after the completion of the work, the furnishing of the architectural services, or the furnishing or performing of such surveying or engineering services or within three months after the material or machinery is furnished in the office of the clerk of the superior court of the county where the property is located, which claim shall be in substance as follows:
"A.B., a mechanic, contractor, subcontractor, materialman, machinist, manufacturer, registered architect, registered forester, registered land surveyor, registered professional engineer, or other person (as the case may be) claims a lien in the amount of (specify the amount claimed) on the house, factory, mill, machinery, or railroad (as the case may be) and the premises or real estate on which it is erected or built, of C.D. (describing the houses, premises, real estate, or railroad), for satisfaction of a claim which became due on (specify the date the claim was due) for building, repairing, improving, or furnishing material (or whatever the claim may be)."
At the time of filing for record of his claim of lien, the lien claimant shall send a copy of the claim of lien by registered or certified mail or statutory overnight delivery to the owner of the property or the contractor, as the agent of the owner;
(3) The commencement of an action for the recovery of the amount of the party's claim within 12 months from the time the same shall become due. In addition, within 14 days after filing such action, the party claiming the lien shall file a notice with the clerk of the superior court of the county wherein the subject lien was filed. The notice shall contain a caption referring to the then owner of the property against which the lien was filed and referring to a deed or other recorded instrument in the chain of title of the affected property. The notice shall be executed, under oath, by the party claiming the lien or by such party's attorney of record, but failure to execute the notice under oath shall be an amendable defect which may be cured by the party claiming the lien or by such party's attorney without leave of court at any time before entry of the pretrial order and thereafter by leave of court. An amendment of notice pursuant to this Code section shall relate back to the date of filing of the notice. The notice shall identify the court wherein the action is brought; the style and number of the action, including the names of all parties thereto; the date of the filing of the action; and the book and page number of the records of the county wherein the subject lien is recorded in the same manner in which liens specified in Code Section 44-14-361 are filed. The clerk of the superior court shall enter on the subject lien so referred to the book and page on which the notice is recorded and shall index such notice in the name of the then purported owner as shown by the caption contained in such notice. A separate lis pendens notice need not be filed with the commencement of this action; and
(4) In the event any contractor or subcontractor procuring material, architect's services, registered forester's services, registered land surveyor's services, or registered professional engineer's services, labor, or supplies for the building, repairing, or improving of any real estate, building, or other structure shall abscond or die or leave the state within 12 months from the date such services, labor, supplies, or material are furnished to him or her, so that personal jurisdiction cannot be obtained on the contractor or subcontractor in an action for the services, material, labor, or supplies, or if the contractor or subcontractor shall be adjudicated a bankrupt, or if, after the filing of an action, no final judgment can be obtained against him or her for the value of such material, services, labor, or supplies because of his or her death, adjudication in bankruptcy, or the contract between the party claiming the lien and the contractor or subcontractor includes a provision preventing payment to the claimant until after the contractor or the subcontractor has received payment, then and in any of these events, the person or persons furnishing material, services, labor, and supplies shall be relieved of the necessity of filing an action or obtaining judgment against the contractor or subcontractor as a prerequisite to enforcing a lien against the property improved by the contractor or subcontractor. Subject to Code Section 44-14-361, the person or persons furnishing material, services, labor, and supplies may enforce the lien directly against the property so improved in an action against the owner thereof, if filed within 12 months from the time the lien becomes due, with the judgment rendered in any such proceeding to be limited to a judgment in rem against the property improved and to impose no personal liability upon the owner of the property; provided, however, that in such action for recovery, the owner of the real estate improved, who has paid the agreed price or any part of same, may set up the payment in any action brought and prove by competent and relevant evidence that the payments were applied as provided by law, and no judgment shall be rendered against the property improved. Within 14 days after filing such action, the party claiming the lien shall file a notice with the clerk of the superior court of the county wherein the subject lien was filed. The notice shall contain a caption referring to the then owner of the property against which the lien was filed and referring to a deed or other recorded instrument in the chain of title of the affected property. The notice shall be executed, under oath, by the party claiming the lien or by his or her attorney of record. The notice shall identify the court wherein the action is brought; the style and number of the action, including the names of all parties thereto; the date of the filing of the action; and the book and page number of the records of the county wherein the subject lien is recorded in the same manner in which liens specified in Code Section 44-14-361 are filed. The clerk of the superior court shall enter on the subject lien so referred to the book and page on which the notice is recorded and shall index such notice in the name of the then purported owner as shown by the caption contained in such notice. A separate lis pendens notice need not be filed with the commencement of this action.
(b) As between themselves, the liens provided for in Code Section 44-14-361 shall rank according to the date filed; but all of the liens mentioned in this Code section for repairs, building, or furnishing materials or services, upon the same property, shall, as to each other, be of the same date when declared and filed for record within three months after the work is done or before that time.
(c) The liens specified in Code Section 44-14-361 shall be inferior to liens for taxes, to the general and special liens of laborers, to the general lien of landlords of rent when a distress warrant is issued out and levied, to claims for purchase money due persons who have only given bonds for titles, and to other general liens when actual notice of the general lien of landlords and others has been communicated before the work was done or materials or services furnished; but the liens provided for in Code Section 44-14-361 shall be superior to all other liens not excepted by this subsection.
(d) In any proceeding brought by any materialman, by any mechanic, by any laborer, by any subcontractor, or by any mechanic of any sort employed by any subcontractor or by any materialmen furnishing material to any subcontractor, or by any laborer furnishing labor to any subcontractor, to enforce such a lien, the contractor having a direct contractual relationship with the subcontractor shall not be a necessary party; but he may be made a party. In any proceedings brought by any mechanic employed by any subcontractor, by any materialmen furnishing material to any subcontractor, or by any laborer furnishing labor to any subcontractor, the subcontractor shall not be a necessary party; but he may be made a party. The contractor or subcontractor or both may intervene in the proceedings at any time before judgment for the purpose of resisting the establishment of the lien or of asserting against the lienor any claim of the contractor or subcontractor growing out of or related to the transaction upon which the asserted lien is based.
(e) In no event shall the aggregate amount of liens set up by Code Section 44-14-361 exceed the contract price of the improvements made or services performed.
This statute has been superceeded as of March 31, 2009.

[5]

This issue is not discussed in this Blog, but is discussed Owen C. Murphy's very fine well written article recently published in the Real Estate Section's Newsletter Spring 2009. See, Section IV, Infra.

& & &

IV. Lien Waivers
12. The form for the "Interim Waiver and Release Upon Payment" has been
overhauled with new language which, as specified in the amendment, must be
"in boldface capital letters in at least 12 point font." The most
substantial change to the form of the interim lien waiver is to provide a
notice that the party executing the interim waiver shall be conclusively
deemed to be paid in full in the amount stated in the waiver, even if
payment has not actually been received, upon the expiration of sixty (60)
days after the date stated in the interim lien waiver. (§ 44-14-366(c)).
13. The language of the final lien waiver form now entitled "Waiver and
Release Upon Final Payment," is also amended by providing the same
formatting requirements as the interim waiver and again providing for the
expanded sixty (60) day period after which the party will be conclusively
deemed to have been paid unless an affidavit of nonpayment or claim of lien
has been filed during that time period. (§ 44-14-366(d)).
14. O.C.G.A. § 44-16-366(f)(2)(c) has been amended to specifically provide
for this new rule, now referenced in both lien waiver forms, that monetary
amounts stated in lien waivers are conclusively deemed to have been paid
upon the expiration of sixty (60) days, thus expanding the thirty (30) day
period provided under the old statute, unless an affidavit of nonpayment or
claim of lien is filed within that time period.
15. The amendments overhaul the form of the affidavit of nonpayment which
can be filed pursuant to O.C.G.A. § 44-16366. The new form provides that a
copy of the affidavit of nonpayment must be sent to the owner of the
property by registered or certified mail or overnight delivery within seven
(7) days of being filed. It also provides that if the project has a notice
of commencement on file and the party filing the affi-
Continued on page 4
II. Lien Text.
5. The substance of the text of the claim of lien must now include a
statement of the expiration date of the lien (three hundred ninety-five
(395) days from the date of filing of the lien if no lien action and notice
of commencement of lien action are filed). The formatting requirements (at
least 12 point bold font) and exact language for this notice are provided
in § 44-14-367. The exact text required in the body of the lien is as
follows
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.
The failure to include this language invalidates the lien and prevents it
from even being tiled. (§ 44-14361.1(a)(2); § 44-14-367). The new
§44-14-367 goes on to provide that "[n]o release or voiding of [expired]
liens shall be required," thus creating the more efficient "self-expiring"
lien.
6. Although no recommended or suggested text is given, the amendments
provide that the text of the claim of lien shall also contain a notice to
the owner of the property that the owner has a right to contest the lien,
presumably referring to the new § 44-14-368, which creates the notice of
contest of lien which property owners can now file. (Discussed at No. 16,
infra). Again, the failure to include this language will invalidate the
lien. (§ 44-14361.1(a)(2); § 44-14-368).
III. Notice Requirements.
7. The lien statute previously required that a copy of the claim of lien be
sent to the owner of the property via registered/certified mail or
statutory overnight delivery "at the time of filing for record his claim
lien." This phrase was ambiguous and required interpretation as to exactly
what time frame would qualify as "at the time of filing" or how literally
such a phrase could be taken. The amendment changes the language to provide
that this notice must be sent to the owner no later than "two business
days" after the date the claim of lien is filed. (§ 44-14-361.1(a)(2)).
8. Regarding this same requirement of sending a copy of the claim of lien
to the owner, the statute has been amended to state that a hen claimant may
provide the contractor with the statutory notice, in lieu of the owner,
only when the owner's address "cannot be found." (§ 44-14-361.1(a)(2)).
This restricts the previous rule which allowed the lien claimant the option
of providing a copy of the lien to the contractor, as agent for the owner,
under any circumstances. The amendment also provides that if the property
owner is a legal entity (such as a corporation) then a copy of the claim of
lien can be sent to the entity's address as listed on the Secretary of
State or the registered agent's address. (§ 4414-361.1(a)(2)).
9. The statute has been amended to require that on all projects where a
notice of commencement has been filed with the Superior Court pursuant to §
44-14-361.5, the lien claimant must, in addition to sending a copy of the
claim of lien to the owner, send a copy of the claim of lien via registered,
Continued from page 3
davit of nonpayment is not in privity of contract with the property owner,
a copy of the affidavit must also be sent to the contractor at the address
shown on the notice of commencement. The same new alternative address
options for entities on file with the Secretary of State apply here as well.
V. Notice to Contest Lien
16. The new code section 44-14-368 is created and provides that an owner or
contractor may challenge a lien and shorten the 365-day time period within
which the lien claimant must commence a lien action by filing a "Notice of
Contest of Lien" in the Superior Court in the form and format provided in
the new code section. The Clerk of Superior Court is required to cross
reference this notice with the lien itself. The filing of the Notice of
Contest of Lien requires the lien claimant to commence his lien action
within sixty (60) days of the receipt of the Notice and to file his notice
of commencement of lien action within thirty (30) days of the filing of
that action. It further provides that the lien will be extinguished and
invalidated as a matter of law upon expiration of ninety (90) days after
the filing of the Notice of Contest of Lien if the lien action and notice
of commencement of lien action have not been filed within that time period.
Again, it-is not-necessary to record a release of lien or obtain a decree
from a judge as to the invalidity of the lien when the deadlines are not
met -- it expires automatically.
The owner or contractor filing the Notice of Contest of Lien must send a
copy of the Notice to the lien claimant (via registered, certified or
overnight mail) within seven (7) days of filing the Notice, service being
deemed complete upon mailing.

CONSTRUCTION LIEN LAW:
LEGISLATIVE UPDATE
SIXTEEN NOTABLE CHANGES TO
GEORGIA'S LIEN STATUTES
By: Owen C. Murphy

& & &


[6]

You could miss it under the old law, but it was substantially more vague.

END

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