Georgia Notice of Commencement

When a Notice of Commencement filing is required, these documents can have a significant impact on both parties throughout the payment chain, and the property itself. Notices of commencement are not required in every state, but when they are the rules and requirements governing their filing must be met in order for the notice to be effective. These regulations can be complex, and there can be a lot of information required.

In Capitol Materials, Inc. v. JLB Buckhead, LLC789 S.E.2d 803, the Court of Appeals of Georgia provided guidance with respect to what is required on a Georgia notice of commencement, and what can happen if the notice is insufficient.

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Video: What is a Notice of Commencement (general)?

 

Notices of Commencement Generally

A notice of commencement is a construction notice that formally defines the beginning of, and provides helpful information about, a construction project. Finding certain information about a project can be difficult for subcontractors and suppliers who need to send notices to protect their lien rights. States with notice of commencement requirements make that information easier to find.

Usually, when a notice of commencement is required, it triggers additional requirements for other parties on the project. In many cases, when a notice of commencement is filed, sub-tier parties on the project must send their own notices that would otherwise not be required.

Georgia Notice of Commencement Statutory Requirements

Georgia requires a notice of commencement to be filed on all construction projects. It can be filed by the property owner, the owner’s agent, or the general contractor, but no matter who files it there are important requirements for the document itself. If a notice of commencement is not timely recorded and properly completed, the owner and property will be exposed to the risk of surprise mechanic liens. This is because sub-tier parties on the project do not need to provide a notice to owner and contractor if the notice of commencement is not filed, or is insufficient.

The requirements for a Georgia notice of commencement are set out by § 44-14-361.5(b). This section states that a notice of commencement must be filed “not later than 15 days after the contractor physically commences work on the property,” as well as being posted on the job site, and must include the following information:

(1) The name, address, and telephone number of the contractor;
(2) The name and location of the project being constructed and the legal description of the property upon which the improvements are being made;
(3) The name and address of the true owner of the property;
(4) The name and address of the person other than the owner at whose instance the improvements are being made, if not the true owner of the property;
(5) The name and the address of the surety for the performance and payment bonds, if any; and,
(6) The name and address of the construction lender, if any.

With such specific requirements set out by statute, it seems like there would be little room for interpretation, or filing of insufficient notice. However, as demonstrated by the Capitol Materials case, and many more cases than one would anticipate being necessary, the determination of which of these elements are essential to the validity of the notice of commencement is a question for the courts.


Helpful Tips on Getting the Most Out of a Georgia Notice of Commencement:

Georgia Notice of Commencement FAQs and Guide for All Project Participants

Cobb Law Group Provides “3 BIG TIPS for Using a Georgia Notice of Commencement to Your Advantage”


Capitol Materials, Inc. v. JLB Buckhead and Interpreting Statutory Requirements

The Capitol Materials case arose from a dispute over the validity of a mechanics lien filed by Capitol Materials. Capitol delivered $443,635.49 worth of drywall to Nationwide Drywall, Inc. a subcontractor of JLB Buckhead, LLC. Capitol was unpaid for the materials, and Nationwide declared bankruptcy. In order to secure payment in the face of Nationwide’s bankruptcy, Capitol filed a mechanics lien against the property.

In response to Capitol’s attempted enforcement of the mechanics lien, JLB Buckhead moved to have the lien extinguished due to Capitol’s failure to timely provide a notice to contractor within the 30-day time period required by statute. Capitol did not dispute that it had missed the preliminary notice deadline, but argued that it was excused from the requirement of providing a preliminary notice to contractor because JLB’s notice of commencement was deficient.

Specifically, Capitol argued that the notice of commencement did not contain the project name, the correct project address / location, the name and address of the person other than the owner at whose instance the improvements were being made, and the name and address of the construction lender. Whether any or all of these alleged defects were sufficient to render the notice of commencement ineffective needed to be determined by the court of appeal.

In order to determine whether JLB’s notice of commencement suffered from “fatal defects” the court looked at whether JLB “substantially complied” with the statutory requirements. Even when the required information is set out by statute, the Georgia Supreme Court has held that “substantial compliance does not require that the language should be exactly as prescribed by statute, but that all essential requirements of the form be prescribed.” And, to figure out what constitutes an “essential element,” the court construes lien statutes in favor of the property owner and against the potential lien claimant.

Video: What is a Georgia Notice of Commencement?

Watch this short video to learn the important Notice of Commencement requirements in Georgia.

Georgia Notice of Commencement – What Is Essential?

In the evaluation of the essential elements of a Georgia notice of commencement, Georgia courts have held that information related to “one of the primary purposes of the statute” is essential. In General Electric Co. v. North Point Ministries, Inc. the court determined specifically that the “name and address of the true owner” and the “legal description of the property” were essential elements.

The court in Capitol Materials added an additional “essential element” and specifically held that the name and contact information of the construction lender required for the sufficiency of a Georgia notice of commencement. Because the lack of lender information was determined fatal to the notice of commencement’s validity, the court did not examine whether the other information allegedly omitted from the NOC was also essential.

Accordingly, Georgia courts have explicitly concluded that the following information is necessary in order to meet the notice of commencement requirements:

  • Name and address of true owner
  • Legal description of the property to be improved
  • Name and contact information for construction lender

While the information above alone is not necessarily sufficient by itself to create a valid Georgia notice of commencement, the failure to include any of this information is fatal to the notice, and negates the requirement that sub-tier parties provide preliminary notice in order to retain the right to file a mechanics lien.


Related Georgia Resources