The Georgia 2022 Legislative Session is currently in session. One bill of particular importance for the construction industry in Georgia, House Bill 1221, was introduced by Rep. Matthew Gambill. If enacted, it would make significant changes to mechanics lien requirements for claims that are $10,000 or less. Here’s what Georgia contractors need to know about these potential changes.
Georgia House Bill 1221 could mean significant changes to certain lien claimants
Bill overview
- Title: HB 1221: Property and lien filings for amounts of $10,000.000 and less include certain additional documentation
- Introduced: February 3, 2022
- Effective date, if passed: July 1, 2022
- Sponsors:
If passed, this legislation would amend OCGA §44-14-361.1 by adding a new subparagraph regarding the requirements for lien filings in Georgia. The new provision would read as follows:
“(2)(B) In addition to the requirements set forth in subparagraph (A) of this paragraph, any lien filed with the clerk of the superior court by a lien claimant in the amount of $10,000.000 or less shall include a copy of the contract on which the claim is based and a copy of a letter demanding payment be sent by registered or certified mail or statutory overnight delivery by the claimant to the owner of the property or, if the owner’s address cannot be found, to the contractor, as the agent of the owner; provided, however, that if the property owner is an entity on file with the Secretary of State’s Corporations Division, sending a copy of the claim of lien to the entity’s address of the registered agent’s address shall satisfy this requirement.”
At a glance
What’s particularly interesting about this legislation is the additional implications and ambiguities it would present.
To recap, if the claim is $10,000 or less, the claimant must attach to their lien claim a copy of the contract and a copy of a letter demanding payment from the project owner.
Now, think about all the additional questions you may have.
Currently, Georgia’s lien laws do not require a written contract in order to secure lien rights. However, under this proposed legislation the implication is that a written contract is required — at least when the claim is $10,000 or less.
Another additional hurdle is the requirement to include a copy of a payment demand letter sent to the property owner. The deadline to file a lien in Georgia is 90 days from the last date the claimant furnished labor and/or materials to the project. Thus, under this new legislation, a claimant is required to send a payment demand letter to the owner, or the contractor if the owner’s address is unknown.
Essentially, this creates a Notice of Intent to Lien requirement for claims under $10,000. As far as the contents of this payment demand letter, the bill is unclear.
Lastly, the last line of the payment demand letter section states that a copy of the claim of lien can satisfy this requirement. This begs the question, what about the requirement to send a copy of the lien claim to the owner no later than 2 business days after the claim of lien is filed of record? Is this requirement satisfied if you sent a copy of the lien prior to filing as required under this bill? Likely not, so then claimants would need to send notice prior to filing and after filing; not to mention the preliminary notice required at the outset of the project.
We’ll be monitoring the progress of this bill and provide any updates.