What do we need to file as an owner at the beginning of a job? Does GA use conditional and unconditional release forms with invoices and payments?
1 reply
Dec 2, 2019
The state of Georgia provides multiple legal tools to help property owners protect themselves against mechanics liens. The two you mentioned, a Notice of Commencement and lien waivers and releases are both powerful weapons to combat the risk of a lien being filed on the property, Let's break each of these down individually.
Georgia Notice of Commencement Requirements
The state of Georgia requires that a Notice of Commencement (NOC) be filed on every construction project within the state. This is typically done by the property owner, the owner's agent, or the general contractor. Filing an NOC is a valuable tool for property owners to protect against "surprise mechanics liens" being filed on the project.
The purpose of a Notice of Commencement is to identify all parties who are contributing to the construction project. If an owner fails to file an NOC, then any potential lien claimants (subs, and suppliers) will not be required to send a preliminary notice before being able to file a mechanics lien.
Georgia law requires that the notice must be filed no later than 15 days after after the work physically commences on the project. There is no prohibition on filing too early, but there are some legal consequences for filing too late. The notice must be filed in the county clerk's office where the property is located; which can also be done electronically in most Georgia counties. Once filed, a copy of the NOC must also be posted on the job site itself so anyone on working on the project can have access to the owner's information. Information that's necessary for sending a preliminary notice.
One thing I'd like to clarify, is the difference betweenlien waivers and releases.Lien waivers, are exchanged for payment during the project to waive that amount of lien rights. Lien releases, on the other hand, are used to cancel a lien claim that has already been filed. Since you mentioned invoices and payments, we'll assume the question refers to lien waivers.
Georgia is just one of twelve state that provide specific, statutory lien waiver forms in order to effectively waive lien rights. However, Georgia has a particularly interesting waiver scheme as the only provide two waiver forms. There is one for progress/partial payments, and one for final payment. The kicker is, that these waivers are both conditional and unconditional.
The waivers are initially a conditional waivers as indicated by the language "upon receipt of the sum of $." But, the waiver will only stay as a conditional waiver for 60 days after the execution. Within that timeframe, if the contractor isn't paid, they must within file an Affidavit of Nonpayment, or file their mechanics lien claim. If no such action is taken, on the 60th day the waiver will convert into an unconditional waiver, regardless if they have been paid or not.