In Georgia, preserving lien rights can get tricky: Preliminary notice is mandatory, but only sometimes. Plus, depending on the situation, different notices might be required. On top of all that, the language used can add even more confusion. Georgia’s preliminary notice rules reference two different documents: the Notice to Contractor and the Preliminary Notice of Lien Rights. Here’s a breakdown of the two and how they are used to protect lien and bond claim rights in the Peach State.
The Difference: Notice to Contractor v. Preliminary Notice of Lien Rights
To keep things simple, we often refer to any required notice document that must be sent at the beginning of the construction project as a preliminary notice. While this typically works just fine, problems can arise when there are multiple types of early notices in a given state.
Georgia has two: a Preliminary Notice of Lien Rights and a Notice to Contractor.
Notice to Contractor
A Notice to Contractor protects the sender’s right to file a Georgia mechanics lien if they aren’t paid. A Notice to Contractor is only required if a Notice of Commencement is filed. Learn how to find out if a Notice of Commencement has been filed on a Georgia project.
If the top of the payment chain files a Notice of Commencement, any potential lien claimant or entity who does not have privity of contract with the owner of the real estate or general contractor needs to deliver this Notice to Contractor in order to maintain their mechanics lien rights.
Notice must be made within 30 days from the filing of the Notice of Commencement or 30 days following the first delivery of labor, services, or materials to the property, whichever is later. For the rule itself, check out the following code section in Georgia law: O.C.G.A. § 44-14-361.1
Parties who don’t have a direct contract with the property owner or general contractor, such as materialmen, subcontractors, or other related parties, have the ability to send a Notice to Contractor. In some situations, Georgia lien statutes dictate that these parties must send a notice to maintain a valid lien claim. You many also need to send a Notice to Contractor to protect your right to file a payment bond claim on public projects.
According to Georgia code, you must include some specific information in your Notice to Contractor, such as the lien claimant’s (your) name, address, and telephone number, the owner’s address, the contract price, and more.
It’s worth noting that sending the Notice to Contractor to a general contractor and a real property owner will be beneficial even where it’s not required. There’s no harm in sending such a notice where it isn’t required, and as we discuss in this article, preliminary notices help build strong working relationships. On top of that, preliminary notices require little effort to send under Georgia lien law. You can send notice by certified mail, registered mail, or by overnight delivery.
When in doubt, it’s a good idea to send the Notice to Contractor and play it safe!
Preliminary Notice of Lien Rights
While the words “preliminary notice” appear in the title of this document, it operates a little differently than preliminary notices in other states. Under Georgia’s lien laws, you must file your Preliminary Notice of Lien Rights with the Clerk of the Superior Court of the County. The Court Clerk will charge a small filing fee. You must send this notice to the owner of the property and the general contractor as well. This notice is never required, but filing one has its perks.
Specifically, when a party has filed a Preliminary Notice of Lien Rights, it prevents lien rights from being knocked out by a prime contractor’s affidavit or lien waiver that attests to the payment of all subcontractors and material suppliers. Unlike the Notice to Contractor, the time period to file the Preliminary Notice of Lien Rights is within 30 business days after the date of first date of furnishing labor, materials, or services for which a construction lien may be claimed.
Another key difference between the Notice to Contractor and the Preliminary Notice of Lien Rights is the required information on the document. Namely, the Notice to contractor calls for a “description of the labor, services, or materials being provided and, if known, the contract price or anticipated value of the labor, services, or materials to be provided or the amount claimed to be due, if any.” (emphasis added). In contrast, the Preliminary Notice of Lien Rights has no such requirement. Additionally, you need to provide the legal description of the property on your Preliminary Notice of Lien Rights.
Georgia Lien Law: Potential Concerns
There are any number of reasons why a party would want to avoid including their contract price or anticipated value to be provided – not the least of which is protecting information like the margins some parties may be putting into their agreements. That is a valid concern, but if the top of the chain files a Notice of Commencement, there really isn’t much of a choice. If a party needs to send a Notice to Contractor, they must send that notice in order to preserve lien rights. A mere Preliminary Notice of Lien Rights when you need to send Notice to Contractor will not be enough.
While it’s never a good idea to stray from notice requirements, there does appear to be a little wiggle room when you provide the contract price or value of work on a Notice to Contractor. After all, it allows for an anticipated value. Lying on such a form is a bad idea. It could have a negative effect on your right to file a claim of lien. But when there’s an estimate, there is some margin for error.