Georgia Legislature Amends Mechanic’s Lien Law

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An important update to Georgia’s statutory lien waiver laws took effect on January 1, 2021. The amendment to Georgia’s mechanic’s lien law alters the form for interim and final lien waivers. Essentially, the new statute clarifies that lien waivers only waive lien or bond rights against the property and do not waive the right to file a lawsuit for nonpayment or other claims. The law also extends the deadline to file an affidavit of nonpayment from 60 days to 90 days.

Georgia’s legislature and governor were prompted to amend the lien law following a controversial 2019 Court of Appeals of Georgia decision in which a contractor sued a property owner for nonpayment. The contractor signed an interim lien waiver at the time it submitted its invoice. Although the contractor never received payment, it failed to record an affidavit of nonpayment or a claim of lien within 60 days of executing its lien waiver. The contractor then filed suit for breach of contract for nonpayment. The court dismissed the contractor’s lawsuit holding that the contractor had waived its contract claim by the interim final lien waiver and subsequent failure to file an affidavit of nonpayment.

In that 2019 decision, the court relied on two provisions of the old law to reach its verdict. The first provision stated that the “waiver or release shall be binding against the claimant for all purposes.” The second provision stated that the “amounts shall be conclusively deemed paid in full…sixty days after the date of the execution…unless…claimant files a claim of lien, or files…an affidavit of nonpayment.” The court held that based on statutory plain language the second provision automatically extinguished not just the plaintiff’s lien rights but also all of the plaintiff’s underlying claims for payment when the affidavit of nonpayment was not timely filed to nullify the lien waiver. Thus, under the old Georgia lien law, failure to file a claim of lien or affidavit of nonpayment on time after signing an interim lien waiver waives all claims and results in the underlying debt being deemed satisfied.

On August 5, 2020, the Georgia legislature enacted amendments (Senate Bill 315) to the Lien Waiver Act that expressly limit applicable waivers and releases under the Lien Waiver Statute to just mechanic lien and bond rights. This change allows claimants to retain any other contractual claims or rights to collect sums owed even if their lien rights are lost. This change has resulted in the deletion of language on the statutory lien waiver form that the sum owed is “conclusively deemed paid” if an affidavit of nonpayment is not timely filed. The time to file an affidavit of nonpayment or claim of lien has been extended to 90 days.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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