Client Alerts
August 25, 2008

Georgia legislature makes significant revisions to Georgia lien statutes

Stites & Harbison, PLLC, August 25, 2008

Liens are a fact of life in the construction industry. Since they are creatures of statute, the requirements vary from state to state. The Georgia legislature recently made significant revisions to the Georgia lien statutes in an effort to clarify and improve the law in this area.

A lien claimant in Georgia is required to meet all statutory requirements to preserve his lien rights, and those requirements are strictly construed against the lien claimant and in favor of the property owner. This has often resulted in inadvertent forfeiture of lien rights. For example, a claim of lien must be filed within three months of last work on a project, and if the last day falls on a weekend or holiday, the claimant does not have until the next business day. U.S. Filter Dist. Group v. Barnett, 273 Ga. 258, 383 S.E.2d 739 (2000). SB374 passed by the 2008 legislative session addresses this and other traps for the unwary. For example, the three-month time limit is clarified and changed to 90 days for ease of calculation, and a deadline falling on a weekend or holiday carries over to the next business day.

Another perceived shortcoming of the Georgia lien statutes was a property owner's difficulty removing an invalid lien asserted merely for leverage or other improper purposes. A lien claimant had 12 months to bring an action on its claim, but a property owner did not have a ready means to shorten the time period and test the validity of the lien. The new legislation changes the 12 months from last work to 365 days from the date of filing the lien for ease of calculation, but also gives property owners an option to file a notice of contest and shorten the time period for commencing a lien action to 60 days from receipt of the notice.

Finally, the new legislation addresses some areas of uncertainty in the lien law. For example, the lien claimant was required to file suit within a year, but there was uncertainty about satisfying this requirement when a contract required arbitration or a party's bankruptcy imposed an automatic stay on lawsuits. The new legislation defines a "lien action" as including a lawsuit, proof of claim in bankruptcy, or binding arbitration.

These changes become effective March 31, 2009. Please contact us if you have any questions.

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