Can a Contractor Threaten to File A Lien and Refuse to Provide A Written Contract in Georgia?
Full Question:
Answer:
A claim for lien may not exceed the contract price of the improvements made or services performed. A lien is the right to retain the lawful possession of the property of another until the owner fulfills a legal duty to the person holding the property, such as the payment of lawful charges for work done on the property. The right of lien generally arises by operation of law, but in some cases it is created by express contract. Liens that arise in construction situations include construction liens, contractor liens, mechanic liens, attorney liens, architect liens and other liens applicable in your state. By virtue of express statutes in most states, mechanics and material men or persons who furnish materials for the erection of houses or other buildings, are entitled to a lien or preference in the payment of debts out of the houses and buildings so erected and to the land, to a greater or lessor extent, on which they are erected. It is used to enforce payment in order to clear the title to the property, because property with a lien on it cannot be easily sold until the lien is satisfied (paid off). In some states, a claim must be filed in the office of the clerk of the court or a suit brought within a limited time. On the sale of the building these liens are to be paid pro rata. In some states no lien is created unless the work done or the goods furnished amount to a certain specified sum, while in others there is no limit to the amount.
In Georgia, the lien must be filed within three (3) months of the last time the person or entity claiming the lien worked on the property or within three (3) months of the last time materials were delivered to or installed upon the property. OCGA Section 44-14-361.1(a)(2).
Near the end of the project, the general contractor may be required to give the owner a special affidavit which states that all subcontractors and suppliers have been paid. The owner is entitled to rely on this document. If there is a statement that all such persons have been paid, then you might be precluded from recording your mechanic’s lien because the owner had a right to rely on that statement. However, if you have sent out your Preliminary Notice of Lien, this alerts the owner to your presence, and it would have to make sure that you were paid before relying upon in that general contractor’s affidavit. If the owner or general properly files a Notice of Commencement, sub-subcontractors and suppliers to subcontractors are required to give a Notice to Contractor.
The owner can cut off potential lien rights by getting the general contractor to fill out a sworn statement by affidavit that all labor, services, and material have been paid for and there are no outstanding claims. However, if you have filed either your mechanic’s lien or preliminary notice, you are protected (especially if such an affidavit is incorrect). That is one of the reasons for filing the Preliminary Notice of Lien Rights.
Please see the contact information at the following link:
http://sos.georgia.gov/plb/contractors/default.htm
Please see also:
http://www.docstoc.com/docs/3651394/GEORGIA-STATE-LICENSING-BOARD-FOR-RESIDENTIAL-AND-GENERAL-CONTRACTORS-TIPS
The following is a GA statutes:
13-11-5. (a) Nothing in this chapter shall prevent the owner from....
(a) Nothing in this chapter shall prevent the owner from withholding
payment to its contractor because of the following: unsatisfactory job
progress; defective construction which has not been remedied; disputed
work; third-party claims filed or reasonable evidence that a claim will
be filed; failure of the contractor or its subcontractor to make timely
payments for labor, equipment, and materials; damage caused by the
contractor to the owner, other contractors, or subcontractors; or
reasonable evidence that the contract cannot be completed for the unpaid
balance of the contract sum. In addition to the other bases for
withholding set forth in this subsection, the owner may withhold a
reasonable amount for retainage, provided that the retainage withheld by
the owner shall not exceed the retainage percentage set forth in the
contract between the contractor and the owner.
(b) Nothing in this chapter shall prevent the contractor or a
subcontractor from withholding payment to a subcontractor for:
unsatisfactory job progress; defective construction which has not been
remedied; disputed work; third-party claims filed or reasonable evidence
that a claim will be filed; failure of the subcontractor to make timely
payments for labor, equipment, and materials; damage caused by the
subcontractor to the owner, the contractor, or contractors or
subcontractors; or reasonable evidence that the subcontract cannot be
completed for the unpaid balance of the subcontract sum. In addition to
the other bases for withholding set forth in this subsection, the
contractor or the subcontractor, as the case may be, may withhold a
reasonable amount for retainage, provided that the retainage withheld
shall not exceed the percentage retained from the contractor by the owner
on account of the subcontractor's work.
8-2-41. (a) Upon entering into a contract for sale, construction, or....
(a) Upon entering into a contract for sale, construction, or
improvement of a dwelling, the contractor shall provide notice to the
owner of the dwelling of the contractor's right to resolve alleged
construction defects before a claimant may commence litigation against
the contractor. Such notice shall be conspicuous and may be included as
part of the contract.
(b) The notice required by subsection (a) of this Code section shall
be in substantially the following form:
GEORGIA LAW CONTAINS IMPORTANT REQUIREMENTS YOU MUST FOLLOW BEFORE YOU
MAY FILE A LAWSUIT OR OTHER ACTION FOR DEFECTIVE CONSTRUCTION AGAINST THE
CONTRACTOR WHO CONSTRUCTED, IMPROVED, OR REPAIRED YOUR HOME. NINETY DAYS
BEFORE YOU FILE YOUR LAWSUIT OR OTHER ACTION, YOU MUST SERVE ON THE
CONTRACTOR A WRITTEN NOTICE OF ANY CONSTRUCTION CONDITIONS YOU ALLEGE ARE
DEFECTIVE. UNDER THE LAW, A CONTRACTOR HAS THE OPPORTUNITY TO MAKE AN
OFFER TO REPAIR OR PAY FOR THE DEFECTS OR BOTH. YOU ARE NOT OBLIGATED TO
ACCEPT ANY OFFER MADE BY A CONTRACTOR. THERE ARE STRICT DEADLINES AND
PROCEDURES UNDER STATE LAW, AND FAILURE TO FOLLOW THEM MAY AFFECT YOUR
ABILITY TO FILE A LAWSUIT OR OTHER ACTION.
