What Happens After I Record My Lien? How Do I Get Paid? - Georgia - Webinar

In this blog, presented by SunRay Construction Solutions and Mark Cobb, Attorney, Cobb Law Group, construction professionals in Georgia can learn what are the do’s and don'ts they need to follow once they have recorded their lien so that they can get paid successfully.

What are the First Questions that an Attorney Will Ask?

Once you have filed your lien and get in touch with your attorney, they will typically ask you four key questions:

Question 1 - The date the lien was filed to determine the deadline for the next step – This is one of the first questions that your attorney will ask so that they can determine when to take the next step. In Georgia, to perfect a lien and take the next step, there are two deadlines to consider within which a matter must be commenced:

a. Within 1 year from the date the lien was filed; or

b. If the owner or general contractor files a Notice of Contest of Lien, then within 60 days from the date that the Notice of Contest of Lien was filed.

It is important for your attorney to know whether they have 30 days, 45 days or 60 days, etc., to take the next step.

Question 2 - Whether next step is litigation or binding arbitration – In Georgia, in order to meet the deadlines, you need to commence an action. An action could be bankruptcy, absconding of the contractor, etc. But in majority of the cases, there are two ways to commence an action:

a. You can either file a lawsuit against the entity with whom the lien claimant has a contract with; or

b. If the contract mandates a binding arbitration, then you would demand for an arbitration instead of going for the litigation.

Question 3 - Other deadlines – The third question is related to deadlines of any other remedies, such as your contract, payment bond claims, personal guarantor, etc. Each of these options have their own deadlines, so your attorney needs to be aware of them and review them accordingly.

Question 4 - Amount owed on lien – The final question is regarding the amount that is owed on the lien. In some cases, there may be other amounts also included apart from the lien amount.

What are the Contract Rights?

Let’s look at what your contract should include because it and its terms and conditions impact the collectability. So, make sure that you consider the points below while reviewing your construction contracts.

1. Do you have a signed document? If yes, then you need to provide a copy of the signed contract to your attorney. In an ideal world, the contract should be signed mutually by all the parties involved.
2. Did you meet all notice requirements? The contract should have a default provision in it, what happens to the default, etc. Non-payment is also considered as an act of default, so your attorney will check if you have met all the notice requirements, have you met the deadlines required for those notice requirements, etc. These factors play an important role in the collectability of your debt.
3. Does your contract require binding arbitration? In most of the construction contracts, binding arbitration is required; however, some contracts allow arbitration as an option. Under the general rules published by the American Arbitration Association, for most of the construction issues, a mediation is required prior to binding arbitration. This does not affect your deadline or your ability to make a claim to go to arbitration. In fact, mediation is a much less expensive, easier, and faster way to collect money.
4. Does your contract consent to the venue? Another key thing to outline in your contract is whether you are okay with the venue, i.e., the venue where you will be bringing the arbitration or filing the lawsuit. Typically, if the general contractor provides the standard subcontract contract, the venue will probably be a place that is convenient for the general contractor but not for you. So, if you can give your own contract, then it is recommended that you out a venue convenient for you and your attorney.
5. Which state law applies? Another very important component is which state law applies as it can have an impact on how you move ahead with your lien.
6. Does your contract include attorney’s fees and costs to collect? One of the major negotiation areas in your contract, if you can, is to include attorney’s fees and costs to collect. Generally, each party pays for their attorney’s fees and costs; however, this can be changed based on the contract.

What are some of the Business Considerations?

Your contract is a legally binding document, and we have listed some of the key considerations you need to focus on regarding it. Here are some of the business considerations to focus on:

1. Amount owed vs. Hard costs and Soft costs – Any legal proceeding, whether it is arbitration or litigation, can get very expensive. So, you must consider these costs from the early stages. Although this may be difficult, it is quite important to determine various elements like the integrity of the other parties, their goals and financial abilities, etc.

These are the hard costs and in addition to determining them, you also need to look at soft costs, such as how many man hours are you going to spend on the documentation, being a witness, etc. You need to look at all these hard and soft costs and compare them with the amount owed to you to determine whether to move ahead with your lien.

2. Other legal options for collections – You need to consider what are the other legal options for collection. For example,

a. Personal Guaranty – Having a personal guarantor is a great option because it is an effective way to get paid.

b. Simultaneous Payment Bond Claim – Payment bonds are common in municipal or state projects; but they are increasingly becoming common on private projects as well. So, you can now record a lien as well as a payment bond claim on private projects. So, you will typically have four options to collect your debit:

i. Your actual client

ii. The owner on account of the lien

iii. The surety or the insurance company on account of the payment bond

iv. The personal guarantor

Having these four options increases the odds of your recovery.

c. Due Diligence/Collectability – Another consideration is performing due diligence. Ideally, you should perform your due diligence at the beginning of the project, even before you sign the contract or start providing materials. But performing due diligence at a later stage can also help you in assessing how likely you are to recover your payment.

3. Contract rights – As mentioned in the previous section, you need to thoroughly review your contract rights and ensure that the terms and conditions are beneficial for you and protect your rights.

4. Customer Relationship – Maintaining good customer relationships is an important aspect of every business. Based on the relationship you share with your clients you may have a positive chance of recovery. So, you also need to consider what kind of relationship you share with your clients before you think of filing your lien or going ahead with it if you have already filed the lien.

How to Take a Decision?

Once you have weighed up all your legal and business considerations, you need to take a decision on how to proceed with your lien and recovering payment. Here are some general options to consider:

1. Do nothing and hope for something to happen – Generally, the deadline is one year from the date that the lien was filed. So, you can probably do nothing and hope that something happens.

2. Attempt negotiation (before deadline expires) – As mentioned above, you have one year, so use that time to negotiate. You have a year to see if the property is sold, if yes, the closing attorney will contact you and pay you to get the lien removed. You can also use this time to get upstream.

So, if you are a supplier and you have sent letters of demand to your subcontractor, then you can also send them to the general contractor and owner, asking them why you haven’t been paid yet or you could even ask them to issue joint checks. There is a high chance that someone who is higher up in the chain may use the retainage amount to pay you and remove the link.

3. Bring lawsuit or make a demand for binding arbitration – Another option is to either bring a lawsuit or make a demand for binding arbitration. As mentioned earlier, you need to look at all the costs involved and decide accordingly.

4. If you commence an action, file a Notice of Filing of Action – If you do bring a lawsuit or make demands for binding arbitration, then in order to fully perfect the lien, you need to file a Notice of Filing of Action within 30 days of bringing the lawsuit or within 30 days from the date you make the demand for binding arbitration. If you fail to do so, then your lien will expire.

5. Waive your lien rights – In some cases, you can also waive your lien rights thinking that the owner will make the payment based on various circumstances, such as if they file a Notice of Contest of Lien. Even if you waive your lien rights, you may still have a contract claim with a longer expiration period that can help you in getting paid. You may also enter a settlement agreement with the GC, owner or some other upstream party.

To summarize, once you record your lien, you need to take a look at all the options that are available at your disposal, use your contract, use your business skills, as well as your creativity to ensure that you get paid successfully.

If you find yourself in a situation where you need assistance to get paid, then ensure that you get in touch with SunRay’s legal experts well in advance, so that they can take all the required steps promptly. Call 800-403-7660 today and get paid what you deserve.

FAQs

When should you send a Notice to Contractor?

In Georgia construction projects:

• General Contractor files Notice of Commencement.
• Subcontractors: File Notice to Contractor within 30 days of starting work, regardless of Notice of Commencement.

In short, subcontractors should always file a Notice to Contractor to protect their rights.

How do I ensure payment for my lien in Georgia?

To ensure payment for your lien in Georgia, it's essential to follow the state's specific lien laws and procedures meticulously. This involves timely filing of the lien, providing necessary notices to all parties involved, and potentially pursuing legal action if payment is not forthcoming.