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Can we apply lien payment to earlier invoices?

We filed 3 liens for our customers and the customer sent the payment for the 3 invoices on the lien. However, we want to collect on earlier invoices as well since some of the invoices are more than 90 days. So we told him that we applied the payment to the earlier invoices. Customer said it is against the law. Is that true? Thanks!

1 reply

Jun 11, 2019

That's an interesting question, and I'm glad you've been able to obtain some payment, at least!

For the bottom line - if a mechanics lien has been filed for multiple invoices, and that lien has only been partially paid, a lien claimant can generally keep their lien intact, at least to the extent it remains unpaid. But, if a lien has been paid in full, that lien should generally be released. Leveraging a fully paid lien to recover other overdue payments could be effective, but it could also open a claimant up to liability for failure to release a satisfied lien. There's a little more to it than that, and I'll explore in further detail below.

First, to reiterate: If a mechanics lien was filed for all unpaid invoices on a project, and only some of those invoices are paid, a lien claimant doesn't automatically have to apply payment to the most recent invoices and then release their lien claim. A lien claim generally doesn't need to be released, in full, until payment is made on that lien, or until the lien becomes unenforceable for some reason.

However, if a lien claim was only filed for a certain number of invoices and payment is made to satisfy those invoices in order to release the filed lien, then a lien claim would likely need to be released because the payment was specifically made in order to satisfy the filed lien. If payment was made without regard for whether it'd apply to prior debts or apply to one or more specific liens, then that might become an open question - and a claimant may be able to successfully argue it could apply a late payment as it saw fit.

Regarding invoices being greater than 90 days - is that in reference to final invoices which were more than 90 days ago? Or is it in reference to more than 90 days passing after an invoice was submitted, but where the job is ongoing?

If the job is ongoing - it's worth noting that in Georgia, the lien deadline is based off the last date of furnishing to the project, as a whole. The fact that more than 90 days have passed after an invoice is largely irrelevant if more work was provided to that job after a given invoice.

But, where more than 90 days have passed after a final invoice/last furnishing, leveraging a completely separate lien from some other project could certainly be helpful to compel payment - though a claimant should be careful. Once a lien has been satisfied in full, that lien should be released. Otherwise, a lien claimant can actually find themselves open to liability.

For more information about Georgia liens, as well as when a lien release might become necessary, these resources will be helpful:
(1) Georgia Lien and Notice Overview, FAQs, and Statutes
(2) I Received Partial Payment — What Should I Do With My Mechanics Lien?
(3) Construction Lien Release Process: the Timeline is Tricky.

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