Dodging The Minefield: Successfully Negotiating The Georgia Materialman's Lien Statute

By James H. Edge

*This article is intended for educational purposes only and is not intended to be, nor should it in any manner be construed to be, the giving of legal advice.

Anyone involved in contracting or the construction industry will likely encounter an issue regarding materialman's or mechanic's liens at some point in their career. Materialman's and mechanic's liens are also sometimes referred to as construction liens and contractor's liens. If you are a contractor or other provider of materials or services, securing a lien on the property you helped improve may be the only way of insuring that you are compensated for your efforts. Despite the inherent usefulness of the lien statute, few areas of the law are more complicated or treacherous. The Georgia materialman's and mechanic's lien statute 1 is the legal equivalent of that scene in Indiana Jones and the Last Crusade when Harrison Ford must spell "Jehovah" by stepping on the lettered floor tiles in order to pass through the tunnel. Just as when Indy failed to remember that, in Latin, Jehovah begins with a "i", if a step is missed or taken out of sequence, the floor can crumble beneath you and your lien will plummet to the depths of uselessness. Therefore, at least a basic knowledge of the process of filing a lien is important to avoid the pitfalls and hidden traps of the lien statute.

I. What is a lien?

A mechanic's or materialman's lien is a claim created by law against real property and the structures on the property for the purpose of securing priority of payment of the price or value of the work performed and materials furnished in erecting or repairing a building or other structure 2 . Liens have at their root the idea that justice requires that an owner of property should not be able to enjoy the fruits of the labor and materials provided by others to improve the property without compensation to those involved. Thus liens provide a way to ensure that those who helped improve property are paid.

II. How do I know if I can file a lien?

Contrary to what the name suggests, mechanic's and materialman's liens are not reserved just for mechanics and materialmen. Under the Georgia Statute, a contractor 3 , subcontractor, mechanic, materialman, laborer, architect, land surveyor, forester or engineer supplying materials, tools, equipment, appliances, labor or other services to the improvement of the real estate may file a materialman's lien. Corporations, partnerships and other entities are given the same status as human beings with regard to filing liens.

However, there are limits to who may file a materialman's lien. Items incorporated into an improvement must be permanently attached as fixtures before a supplier may be entitled to file a lien. For example, bed linens used in a motel are not fixtures, and thus the supplier of bed linens is not entitled to file a lien against the property. 4 Furthermore, the supplier of a materialman does not have the right to file a lien. For instance, one who paints fence posts before delivering them to a fencing company, which later incorporates the posts into an improved lot, would not be able to file a materialman's lien against the property.

III. How do I file a lien?

Anyone who falls under the category of materialman or mechanic as stated above and has a claim for materials or labor in the improvement of a property may file a lien. That said, it is best to have an attorney experienced in this area of law assist you in the filing of liens. The expense of involving an attorney can pay dividends if the sufficiency of your lien is challenged in court. As I eluded to above, this area of the law is rife with hidden traps which can render your lien invalid.

A materialman's lien must be filed within three months of the date of completion of the work or the furnishing of services, materials or machinery. 5 If you are a materialman, this means three months from the date of furnishing the last item of materials. The date from which the three month clock runs is the date of delivery to the site, not the date of invoicing or payment. 6 If you are a laborer or other provider of services, the key date from which the three month period runs is the date the last labor necessary to finish the job was done. 7 It is important to remember that the three month date is absolute, meaning that if the last day of the three months is a holiday or weekend when the clerk's office is closed, too bad. You must have your lien filed by that time.

A materialman's lien must be filed in the county where the property is located. Filing a lien means filing it of record in the office of the Clerk of the Superior Court. In order to be filed, the lien must be presented to the clerk's office and a filing fee must be paid. Under Georgia Law, a materialman's lien must contain additional information as required by statute in order to be valid; however, this paper is not intended to cover those numerous other requirements. It is important to note that failure to include any of the necessary information, mentioned or not mentioned in this paper, in the lien may render the lien invalid and useless. If you are concerned about whether the liens that you are filing are sufficient, you should see an attorney to make sure all is well before filing.

IV. How do I get my money?

The filing of a claim of lien does not guarantee the payment of any debt owed. The claim of lien itself serves to cloud the title of the owner's property, making it difficult or impossible to transfer the property or refinance an existing loan secured by the property without paying off the lien. Thus the very act of filing a lien itself may help to expedite settlement or payment of an outstanding debt, but again it does not guarantee payment.

To actually collect on a lien, one must file suit to foreclose the lien. The decision to file suit should follow an appointment to see an attorney experienced in this area of the law to determine your available options. It is important to remember that an action to foreclose a lien must be commenced within twelve (12) months of the date the claim became due. 8

V. Conclusion

The world of materialman's and mechanic's liens is a tricky and sometimes treacherous place. The above paper is intended only to provide a basic overview of the process of filing liens. Each case varies depending on the facts and different actions may be required based on the situation. Thus, the filing and foreclosing of liens is a job best left to an attorney who has experience with this area of the law. If you have questions regarding liens or other construction issues, please feel free to contact our firm.

About the author: Jim Edge is an attorney in practicing with Coleman, Chambers & Rogers, LLP, in Gainesville, Georgia. This firm routinely handles matters regarding liens, contract disputes, collections and other construction issues in Hall County, White County (Cleveland), Lumpkin County (Dahlonega), Gwinnett County (Lawrenceville), Jackson County (Jefferson), Dawson County (Dawsonville), Banks County (Commerce), Habersham County (Demorest, Cornelia) and all of Northeast Georgia.

1 O.C.G.A. § 44-14-360 et. seq.

2 See Black's Law Dictionary, 1132 (Revised 4 th Ed., 1968)

3 "Contractor" as it is defined by O.C.G.A. § 44-14-360(1) means one who has privity of contract with the property owner.

4 See Skandia v. Augusta Innkeepers, 157 Ga. App. 279 (1981).

5 O.C.G.A. § 44-14-361.1(a)(2)

6 See Atlanta Jewish Community Center, Inc. v. Tom Barrow Co., 130 Ga. App. 608, 203 S.E.2d 921 (1974).

7 See Sears, Roebuck & Co. v. Superior Rigging & Erecting Co., 120 Ga. App. 412, 170 S.E.2d 721 (1969).

8 O.C.G.A. § 44-14-361.1(a)(3). Again, this is the date that work was completed or the last date the materials were delivered.