Materialman and Mechanic Liens: Liens for Authorized Work Only

contractorGeorgia law allows contractors, subcontractors and suppliers who supply work, labor or materials improving property for others, to claim an interest in and lien that property if payment is not made. The recording of such Mechanics or Materialmen liens can hold up the sale or refinancing of the property owner’s mortgage, or even result in the seizure and sale of their property. Consequently, these liens can be a very effective tool for Contractors, Subcontractors and Suppliers to ensure payment for their work, services or materials. However, the requirements and procedure associated with the creation and enforcement of liens are very specific and strict. Failure to properly follow these procedures can result in the forfeiture of lien rights and possibly legal liability by the property owner against the lien claimant. Prior to filing a lien, it is important to ensure that (1) there is a legal right to file a lien, and (2) the lien filing and lien perfection* procedures are properly followed.

One of the most fundamental considerations to determine lien rights is whether there is a contractual relationship between you and the property owner or contractor, either directly or through a direct chain of contracts. Where a contractor is hired to perform work for a property owner, he/she is recognized as that owner’s agent. That Contractor’s direct Subcontractor for the project has such a direct relationship with both the contractor and owner. A subcontractor of the Subcontractor does not. Subcontractors and suppliers providing labor or materials to other subcontractors should always ensure that the subcontractor requesting the work or materials was authorized to do so by the Owner or General Contractor. If not, the work or materials may not be secured by a Mechanics or Materialmen lien.

Where there is no direct relationship, remote subcontractors and suppliers may be required by law to provide notice of their work to the contractor and owner. In many cases, a Notice to Contractor, identifying the work to be done, as well as other information must be posted and recorded with the Superior Court of the county where the property is located. This allows the Contractor and owner notice and an opportunity to object to the work or supplies before they are provided. Work that is not authorized by the Property Owner or Contractor cannot be liened.

In Benning Const. Co. v. Dykes Paving & Const. Co., 263 Ga. 16 (1993), a Subcontractor hired a paver to do work on a project it had been hired to do. The contract between the Contractor and original Subcontractor had a provision that prohibited further subcontracting out work without the Contractor’s consent. The paver failed to pay for the asphalt material used for the job and the supplier filed a lien. The Georgia Supreme Court held that because the paving subcontractor was not authorized and expressly prohibited in the original Subcontract, the original Subcontractor’s agreement with the Paving Company was not within a direct contractual line with the Contractor. Thus the supplier had no lien rights for recovering payment for its work.

One area where Owner authorization is often overlooked is when a tenant of property requests work, services, or materials for the improvement of the leased property. The tenant is not necessarily considered an agent of the owner, and thus it is important to ensure that the work, services and materials requested by the tenant is actually authorized by the owner of the property beforehand. As stated in Worley v. Cowper Const. Co., Inc., 259 Ga. App. 263 (2003), By contracting for improvements to be made upon leased premises, a tenant does not create a basis for imposing a materialman’s lien against the landlord’s interest in the premises. Finally, Contractors, Subcontractors and Suppliers should all note that Mechanics and Materialmen liens cannot be filed against government property for government projects.

All Contractors, Subcontractors and Suppliers should ensure that the work or supplies they provide for the improvement to property is authorized by the property owner or the owner’s Contractor. Without such authorization, direct or implied, the worker or supplier will not be able to avail itself of the lien protections established by Georgia law and take the unnecessary risk of not being able to recover payment for their work, services or materials. Ensure your ability to take advantage of the payment protections established by Georgia lien statues by contacting the attorneys at Hecht Walker.

*Perfecting a lien ensures statutory procedural requirements are met so as to make the lien legally enforceable.

This article is not intended to replace the need to contact legal counsel in the event you would like to ensure or protect your lien rights. This article is based upon applicable laws as of the date above, and contains general information that may change depending on particular circumstances of certain matters. Please note that every situation is different and contains unique facts that may allow for a successful claim or defense or not. We always advise that you speak to legal counsel directly in order to learn how to ensure, preserve and protect your lien rights.

Next Installment – Perfecting Your Lien Rights.

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