Effective March 31, 2009 (not April 1), Georgia lien law is officially set to undergo a series of substantial changes, as a result of Governor Sonny Purdue signing Senate Bill 374 into law. These changes are significant and exist throughout the lien statutes. Many of the revisions require new, very specific procedures and forms that must be precisely followed in order to prevent waiving lien rights. Although the new lien law is not technically retroactive, it appears that several of the requirements could pertain to liens filed prior to March 31.
Below is a summary of some of the significant changes scheduled to go into effect. This summary is a brief overview and does not address each and every revision or additional requirement.
Notice to Contractor—Where a Notice to Contractor is required in order to preserve lien rights following the filing of a Notice of Commencement, the Notice to Contractor must “be sent by registered or certified mail or statutory overnight delivery.” The Notice to Contractor must be sent by the lower tier contractors and suppliers to the contractor filing the notice of commencement and the owner.
Filing a Lien—Assuming claimant has preserved its lien rights, a lien must be filed within “90 days” after completion of the work or services performed on, or the labor and material furnished to, a project.
Lien Language—Any lien must include the following language, and failure to do so will invalidate the lien:
(a) When explaining when the “claim became due,” the lien must include the phrase “which is the last date the labor, services, or materials were supplied to the premises.”
(b) The lien must also state in at least all caps, bold face 12-point font that: “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.”
(c) There must also be specific notice to the owner that the owner has the right to contest the lien.
(d) The lien must continue to satisfy the requirements set forth under the current lien law.
Notice of Claim of Lien—No later than two business days after the date the claim of lien is filed, the claimant must send by registered or certified mail or statutory overnight delivery a copy of the lien to the owner (or contractor where the owner’s address cannot be found) and to the contractor where a notice of commencement is filed.
Action on the Lien—A lien claimant must file a “lien action” against the entity with whom it contracted for the amount due within 365 days from the date the claimant filed its claim of lien. Under the new law, “lien action” includes litigation, binding arbitration, or filing of a proof of claim in a bankruptcy. Failure to file within 365 days from date of filing of lien renders lien claim unenforceable.
Exception to Lien Action—Claimant is not required to file a lien action or obtain judgment against the contractor or subcontractor as a pre-requisite to enforcing a lien where the contractor or subcontractor is no longer subject to personal jurisdiction of Georgia courts during time period for filing a lien action.
Notice of Lien Action—Party filing an action on a claim of lien must file a notice of commencement of suit with the clerk within 30 days of commencing a lien action.
Interim Waiver and Release Upon Payment and the Waiver and Release Upon Final Payment— Both the procedures and forms for interim and final lien waivers, bond waivers, and affidavits of non-payment were modified. Claimants should consult with counsel to assure conformance with all new requirements, including new mandatory language which must appear in all caps, bold face, and 12-point font. A presumption of payment occurs 60 days after execution of the waiver unless an affidavit of non-payment is filed prior to that time.
Notice of Contest of Lien—Owner or contractor may shorten the time for enforcing a lien by filing a Notice of Contest of Lien in superior court. This Notice of Contest allows an owner or contractor to contest a lien within a shortened period by forcing a claimant to commence its lien action within 60 days of receipt of notice of contest. bankruptcy. Failure to file within 365 days from date of filing of lien renders lien claim unenforceable.