Sub Threatening Liens on Client Properties

2 weeks ago

Granite Sub-Contractor sent email stating extra charge for correcting defective work and has threatened a lien on client properties if invoices are not paid by 11/8.

My husband in the GC on the residential renovation work.

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Anonymous

Please also provide recommendations for Construction Attorneys in the Atlanta area.

CEO Levelset

When subcontractors are threatening to file a mechanics lien against the job it’s important to take the threat seriously, and start to consult your options. Your question is short, but presents a number of issues, and I’ll address each of them.

Change Orders v. Defective Work

Is the subcontractor entitled to the “extra charges?”  Or was the subcontractors work “defective” requiring him/her to fix the work on their own dime?  Is the “extra charges” for work that was within the original contract’s scope, or is it work beyond the original scope?

These are all difficult questions to answer, and parties very frequently fight about these things. The answers are not always very clear.

When the parties (like you and the subcontractor) are fighting about whether “extra work” must be paid for (i.e. a change order), or not…the fact is that the subcontractor does have the right to file a mechanics lien for the full amount that they claim to be due.  Even if it’s in dispute.

Options when subcontractors threaten a lien filing

So, if a subcontractor is threatening a mechanics lien for work that is in dispute…and they have the right to actually file a lien for this amount, what are your options?  Are you forced to just pay them?!?

You are not forced to pay the subcontractor and bend to their will, but you will need to deal with the lien claim. The property owner will certainly care about this lien, and as the general contractor, you likely have a provision in your contract requiring that you keep the property free and clear of liens filed by subcontractors. So, if the sub does file a lien, you’ll be in default of your contract!  And your duty to the owner!

So, what are your options?

1. You can compromise with the subcontractor.  Remember, even though the parties may be starting to dig in their heels here, a full-blown legal dispute is good for no one. You and the subcontractor disagree. Explore if there is a way to compromise on your differences and avoid the dispute.  It’s even possible to do this formally — through a mediation — which, depending on the size of your dispute, may be worth it.  There is also a great new tool from a group that does these mediations electronically, FairClaims.com.  Something like that may be worth a shot.

2. Prepare to “bond off” the lien:  If there’s no hope of a compromise, you’ll want to look into “bonding off” any liens filed by the subcontractor.  Here is an article about this to help you understand the process:  Primer on Mechanics Lien Bonds & Bonding Off A Mechanics Lien.  And you can get a quote for lien bonds from companies like Surety One, as you can see here: Georgia’s Mechanic’s Lien Release Bond.  Remember, this is something you want to prepare for.  There’s no need to “bond off” the lien if the lien is never filed.  Also, “bonding off” the lien will just get the lien off the books and keep you clear with the property owner, but you’ll still need to deal with the subcontractor’s dispute.

Recommendations for Atlanta, Georgia Construction Attorneys

You can find a list of construction attorneys in Georgia here.  I specifically recommend reaching out to Mark Cobb of the Cobb Law Group. I’ve been a fan of their firm and their content for years.  Here is their website.

| 1 Upvotes
Founding Partner Cobb Law Group

Thank you, Scott Wolfe, for the recommendation.  The advise which Scott posted is correct, and they may be additional options depending upon the amount of the lien claimed and the speed at which the lien needs to be removed.  If we can help in any way, please do not hesitate to reach out to me or my paralegal James Eubanks.

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