Filing a mechanics lien on a condominium construction project brings up a lot of questions. Does the mechanics lien attach to the individual condo unit, or the entire building? What does one lien when working on the common elements? What if the condo units are still owned by the developer and have not yet been sold? The Georgia Condominium Act addresses these questions, and specifies exactly what a contractor is allowed to file a mechanics lien against.
Mechanics Lien Rights in Georgia
Georgia’s mechanics lien rules give most contractors, suppliers, and other participants on a construction project the right to file a mechanics lien if they aren’t paid. (Of course, in order to retain the right to file a claim, they must adhere to the state’s preliminary notice requirements.)
A mechanics lien generally attaches to real property, like a house or commercial building. Because a condominium is divided into lots of smaller properties, this type of construction project complicates a lien situation. If a contractor performs work on a single condo unit, it doesn’t seem reasonable for their mechanics lien to encumber all of the other units, too.
At the end of the day, contractors should remember one thing: You have the right to file a mechanics lien if you are not paid for your work or materials. Just exactly what you’re allowed to file a lien against is the question for condo associations: the building or the unit?
These issues are addressed within the Georgia Condominium Act, found in O.C.G. §44-3-70 et seq. The specific topic of liens is addressed in §44-3-95 (reproduced at the end of this article).
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The Importance of “Submitted Property”
How a mechanics lien attaches to a Georgia condominium depends in large part on whether the condominium is or is not submitted property. According to the Georgia Condominium Act, submitted property means “property lawfully submitted by the recordation of condominium instruments.”
Condominium instruments just refers to the documents that the developer or association files with the county recorder’s office. These will typically include the “plats and plans” (maps and architectural drawings), along with documents that create the condo association, establish the bylaws, and describe the rights and responsibilities of each condo owner.
So if the developer has filed the proper condominium documents, the property is considered submitted property. Once a condo is submitted property, unless specifically allowed otherwise (see next section), liens cannot attach to the property as a whole.
Work Performed in Original Construction of Condominium
When work or services are performed in the original construction of the property (or any portion of it), the construction lien may be recorded against the property as a whole. This is true regardless of whether the property is or is not submitted property.
Work Performed on Individual Units
When work is provided on a specific condominium unit, a lien may arise and be created upon the specific condominium unit as it does any other separate parcel of real property subject to individual ownership.
Say, for example, a contractor is hired to remodel a kitchen in a condominium in Georgia, but the unit owner doesn’t pay them. The contractor can file a mechanics lien on the individual unit, but it will not attach to the condominium property as a whole.
Work Performed on Common Elements
When work is provided on the common elements, a construction lien can be filed against all the condominium units. In this case, any unit owner may remove that lien from his condominium unit by the payment of the amount attributable to his condominium unit.
Imagine that a contractor builds a $100,000 swimming pool owned by a 100-unit condo association, but doesn’t receive payment. The contractor’s mechanics lien would encumber all of the units in the building, with each unit owner on the hook for $1,000. However, the owner of an individual unit could pay the contractor $1,000 to remove the claim from their specific part of the building.
Georgia Condominium Act § 44-3-95: Mortgages and liens
(a) In the event of the foreclosure of any mortgage or lien which is subordinate to the declaration or from which any condominium unit has been released, the foreclosure shall not terminate the condominium; and, upon his purchase, the mortgagee, lienholder, or other purchaser at foreclosure shall become the owner of all condominium units which had not been released from the mortgage or lien prior to the purchase. In the event of the foreclosure of any mortgage or lien which is not subordinate to the declaration and from which no condominium unit has been released, the foreclosure of the mortgage or lien shall terminate the condominium unless the foreclosing mortgagee or lienholder subordinates to the declaration prior to foreclosure or forecloses subject to the declaration. For the purposes of this Code section, a lien for labor or services performed or for materials furnished in the improvement of property, either before or after it becomes submitted property, recorded upon the submitted property as a whole after the recordation of the declaration, shall be subordinate to the declaration.
(b) Any other provision of law to the contrary notwithstanding, liens for labor and services performed and for materials furnished for the improvement of property either before or after it becomes submitted property, which labor, services, and materials were performed or used in the original construction of any portion of a condominium or additional property of an expandable condominium, may be recorded against the submitted property as a whole; provided, however, that any such lien shall constitute a valid lien only against those units which have not been conveyed by the declarant to any person in a bona fide sale and purchase transaction prior to the recording of the lien. For those units which have been so conveyed, the lien shall be inapplicable and unenforceable.
(c) Subsequent to the creation of the condominium and as long as the submitted property remains subject to this article, no lien shall arise or, except as provided in subsections (a) and (b) of this Code section, be effective against the submitted property as a whole. During such period of submission to this article and except as provided in this subsection, liens or encumbrances shall arise or be created or effective only against each condominium unit in the same manner and under the same conditions in every respect as liens or encumbrances may arise or be created upon or be effective against any other separate parcel of real property subject to individual ownership; provided, however, that labor or services performed or materials furnished for improvement of the common elements, if duly authorized by the association, shall be deemed to be performed or furnished with the express consent of each unit owner and shall, if other applicable provisions of law are complied with and subject to the limitations thereof, create a lien upon all of the condominium units subject to subsection (d) of this Code section.
(d) In the event that any lien for labor or services performed or materials furnished for improvement of the common elements becomes effective subsequent to the creation of the condominium, any unit owner may remove that lien from his condominium unit by the payment of the amount attributable to his condominium unit. The amount shall be computed by reference to the liability for common expenses pertaining to that condominium unit pursuant to subsection (c) of Code Section 44-3-80. Subsequent to the payment, discharge, or other satisfaction, the unit owner of that condominium unit shall be entitled to have that lien released as to his condominium unit in accordance with applicable provisions of law; and, notwithstanding anything to the contrary in Code Sections 44-3-80 and 44-3-109, the association shall not assess or have a valid lien against that condominium unit for any portion of the common expenses incurred in connection with that lien.