GEORGIA CONSTRUCTION, BOND & LIEN LAW BLOG

You probably know that payments bonds are a great way to increase the likelihood of getting paid for the work you perform or the materials you supply on Federal, state and local government projects in Georgia.  But, did you know that private construction projects can also have payment bonds?

Public Works Projects and Payment Bonds: Since public policy prohibits a supplier or a subcontractor from filing and foreclosing a claim of lien against a public project, the federal and state governments have established a bonding procedure to protect the interests of construction professionals who are not paid for their work and supplies.  All construction contracts in excess of $100,000 for any public works located in Georgia (this includes Federal public works projects as well as State of Georgia and local municipality public works projects) must be covered by a payment bond.  Payment bonds may also be issued for smaller public works projects.  Because these federal, state and local construction projects are governed by statutes, payment bond claims against government projects are (largely) governed by statutes.  Federal projects, for example, are governed by The Miller Act.  The State of Georgia has enacted two separate code sections relating to payment bonds: one covers construction projects owned by the State of Georgia, and one covers construction projects owned by counties and local municipalities in Georgia (collectively, these are referred to as the Little Miller Act because it mirrors its federal counterpart).  For more information, on public works payment bonds, please click here.

Private Construction Projects and Payment Bonds: Government public works projects require payment bonds by statute, but there is no requirement that privately-owned construction projects must be covered by a payment bond.  Nonetheless, an owner or a general contractor may also include a payment bond.  If so, that is probably great news for any sub-contractor or supplier working in Georgia!  However, since payment bonds are not required by statute, they are not as regulated by statute as the public works payment bonds.  Instead, they tend to be governed by contract; specifically, they are governed by the contract between the surety (the insurance company providing the payment bond, the obligee (the person requiring the bond), and the obligor (the person performing the construction contract).  What does this mean?  It means you should obtain a copy of the payment bond as soon as possible and read it!  It will set out the method(s) of making a claim as well as the deadlines.

Payment Bonds and Mechanics and Materialmen’s Liens on Private Projects: Even if the private project on which you are working or supplying materials in Georgia is covered by a payment bond, then you are still allowed to file a claim of lien if you are not paid.  This is a boon to sub-contractors and suppliers as it gives them multiple options for collecting the money they are owed.

Needless to say, payment bond claims on public works projects, payment bonds claims on private projects, and mechanics and materialmen’s lien claims each have their own requirements and deadlines.  If you have provided labor or materials on a project but you haven’t received payment, please contact a construction lawyer in Georgia who can assess your claim and help you navigate the requirements and meet the deadlines to file your payment bond claim and construction liens.

This is a general information article on Georgia construction law and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

Today, the Cobb Law Group is pleased to welcome a guest post from a consultant to the construction industry; we hope that you will leave us comments and feedback regarding this article!

During tough economic times, cost-cutting is essential in order to stay competitive. However, if done the wrong way, cost-cutting can have a detrimental impact on the project’s outcome. Construction project management techniques can help keep the costs of a project down without losing quality in your work. In fact, with the right management and smart choices, finding ways to save money can lead to improvements in field operations and business as a whole.

Clearly Communicate with Divisions and Workers

Moments of miscommunication can easily create complications which take valuable time to resolve. Communication between divisions of your business should be clear and effective. You may want to research technologies to find out if there are new ways you can streamline your communication process to increase efficiency. Of course, you also need software that is within your budget and that has benefits which will lead to savings over time.

In field operations, make sure your foremen provide objectives and clearly state time limits for every task. Sometimes foremen create a deceptive impression of being effective as managers even when they do not state daily goals in numbers. In general, workers respond best to specific, measurable tasks with reasonable deadlines. This keeps everyone on track and focused.

Have a Plan of Action for All Team Members

Develop daily action plans that fully utilize your labor force. Make sure that your workers are putting energy in the places where they work most efficiently in order to save time and money. In the construction business, daily plans change according to outside factors such as suppliers and weather conditions. Create action plans with built-in flexibility, and use daily logs to record progress, note barriers to completion and log the effectiveness of your plans.

Always Improve Field Performance

Try to lower construction costs over time rather than gradually raising them. This is a key difference between being an employee and being a business owner or manager. An employee can gradually ask for more money as expertise grows. A business needs to become increasingly competitive in order to maintain position in the market. The companies that prove successful tend to adopt this strategy. Use all the experience you gain to find ways of improving efficiency levels for future projects.

Closely Manage Indirect Labor

Indirect labor costs needs to be clearly calculated in order to improve field performance.  Indirect labor can include time spent on paperwork and in meetings, time spent driving on the job or briefly repairing equipment and preparation or light work time in the yard.

To manage costs, make sure to include these tasks in your cost codes. Have your laborers report the time they spend on each one. If you are not currently monitoring your indirect labor costs, you may be able to save anywhere from 10% to 30% of your project budget.

Know When to Negotiate

When saving money, it is better to have a few suppliers and maintain strong relationships with them rather than to have many suppliers and weaker networking ties. With strong relationships, you can often negotiate better deals when you need them. If your suppliers feel invested with you, they will be more likely to work with you to maintain your business and theirs.

Maintaining Your Construction Business

Cost-cutting always needs to be done wisely and with future business in mind. Basically, you want to optimize your construction work so that when economic times change, you are simply more seasoned and more competitive. Use your new initiative to improve your field performance and better manage your budget, saving money, maintaining quality and strengthening your business.

Erin Palmer works for University Alliance and writes about many of their PMI certification prep courses. Each of UA’s partner schools offers helpful articles on topics such as construction project management training.

This is a general information article on Georgia construction law and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

The pundits continue to debate the state of the economy, but since we represent so many construction professionals, we are able to notice trends pretty quickly ourselves.  To no one’s surprise, government contracting work has increased, and this has given much-needed work to subcontractors, and suppliers in Georgia.  Many clients who had stayed away from public works projects have since embraced them.

Unfortunately, we have noticed that government contract jobs in Georgia have been “slow pay”.  What does that mean for those working and supplying on government jobs?  Practically speaking, it means that our clients’ cash flow is interrupted–usually for no reason.  It also means that they are having to enforce their payment bond claim rights in Georgia.

Almost every day, we receive a telephone call from a specialty subcontractor or a supplier who is not getting paid for their work and materials on a government project.  Fortunately, if a payment bond claim is timely filed, then their likelihood of recovery is very good.  Here are some important points to keep in mind if you are working on a government project.

• Know Whether the Project Owner is a Governmental Entity: Be very careful to identify the owner of the public works project on which you are working.  Some projects may look like they are owned by the Federal, state or local government, but, in fact, they are owned by a private entity.  Public or military housing projects can be owned by a private corporate and then leased back to the government.  Determining the owner helps determine which set of requirements apply in your particular situation.  Development Authorities, Housing Authorities, and similar “government” organization can blur the distinction between owners.  (Remember, just because there is a payment bond covering the project does not mean that it is a government project–payment bonds may be found on private projects too!)

• Know the Government Entity Layer: If you know that your project is a government contract, then you must determine for which governmental layer the project belongs.  Generally speaking, your government project may be Federal, State of Georgia, or a local municipality (such as a county or city government).  Each of these three layers of government are covered by their own statutes and requirements for payment bond enforcement.  All Federal projects are covered by The Miller Act; all State of Georgia projects are coverer by The Little Miller Act so it is vital to apply the proper rules to your slow-pay issue.

• Meet the Deadline for Filing a Payment Bond Claim in Georgia: Typically, you must file a claim within 90 days of the last day in which you worked on the governmental project.

• Get a copy of the Payment Bond: The surety issuing the payment bond covering your project will have certain requirements and can help identify owners, general contractors and addresses.  Some general contractors make obtaining copies of the payment bond available, some do not.

• Make Sure that You Sent A Notice to Owner/Notice to Contractor: If you are a third tier supplier or subcontractor then you must send a Georgia Notice to Owner (“NTO”) and a Georgia Notice to Contractor (“NTC”) on all projects owned by the State of Georgia or any local municipality.  These NTO’s and NTC’s must be sent within thirty days of the first day in which you began working on the government project or you began supplying on the government project.  If you fail to do this, you may be prohibited from filing a claim against the payment bond.

If you have any questions about contractor rights or suppliers’ rights regarding government bond claims on projects located anywhere in Georgia, please contact us.

This is a general information article and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.

This week, we are tackling another great question which we get asked frequently.  As Georgia construction lawyers, we are usually glad when a materialmen’s lien is bonded off as it can increase the speed and likelihood of our client’s recovery.

So what is “bonded off”?  As long time readers of this blog understand, a properly filed Georgia mechanics lien (which can also be called materialmen’s lien, construction lien, contractor lien, subcontractor lien, or supplier lien) makes the real property where your work was performed or where your materials were used stand essentially as collateral for the debt.

Claim of Lien Review: Let’s use the example that you supply materials on a construction project in Georgia, and you are owed $80,000 for these materials.  In a normal, commercial collection scenario, your debt is not secured (there is no collateral) and only one person owes you the money–your customer who contracted for the purchase of supplies.  But the Georgia Mechanic’s and Materialmen’s Lien Act gives you the opportunity to put yourself in a much better position by filing a proper supplier’s lien.  After you file your materialmen’s lien, then it is possible to force the sell of the real estate (similar to a foreclosure) in order to recoup the money you are owed for your supplies.  In addition, this will likely have the effect of bringing the real property owner and the general contractor (if applicable) into helping you solve the problems between your customer and you.  Although every situation is unique, we have seen real property owners and general contracts pay you quickly  in order to get your Claim of Lien released!

Bond Review: Pursuant to Georgia law, mechanic’s liens and materialmen’s liens are clouds on real estate title; this means, the owner of the real estate may not have a clean title to convey to another person.  Thus, claims of liens may prevent the liened real estate from being sold, conveyed or re-financed.  Because there may be a legitimate dispute (for example, the lien is invalid, the work performed or the materials supplied were not acceptable, etc.), the real property owner has a mechanism for removing the Claim of Lien, and this mechanism is commonly referred to in Georgia as “bonding off” the lien.

How does a real property owner bond off a lien in Georgia? There are two common ways for a real estate owner to bond off a materialmen’s lien.  The owner can either pay a cash bond to the clerk of court or, more commonly, the owner purchases a bond from an insurance company and files this information with the clerk of court where the lien was filed (there are many steps which an owner must undertake in order to adequately bond off a lien which we will address in a future blog entry).

Thus, if the supplier in our example above meets all of the legal requirements for enforcing his lien, he will look for recovery from the bond rather than from the forced sell (i.e., foreclosure) of the real estate.  So, the “collateral”, if you will, has been substituted: the collateral was originally a piece of land, now the collateral is either cash being held by the clerk of court or an insurance policy essentially guaranteeing payment if the lien is enforced.  Needless to say, it will probably be easier and quicker to collect the balance owed from cash or an insurance policy rather than negotiating the steps of a legal foreclosure.

There are so many specific and unique issues which arise with Georgia’s Mechanics and Materialmen’s Lien Laws; if you have questions, please contact us at the Cobb Law Group.

We would enjoying hearing your comments and experiences with a construction lien which was bonded off.

Potential clients regularly call us and ask how long a lien lasts in Georgia.  As is true in most areas of law, the short answer is “it depends.”

Georgia Liens are Valid for One Year: In Georgia, a Claim of Lien is valid for one year from the date that the lien is filed.  If the lien claimant files a materialmen’s lien and then doesn’t enforce its lien rights within the year, then the mechanics or materialmen’s lien will automatically expire.

How Lien Claimants Can Extend the Lien Beyond One-Year: If the lien claimant enforces its rights before the one-year anniversary of the filing of the original construction lien, then the lien will continue to be valid.  How does a Georgia Lien Claimant enforce its rights?  Generally speaking, the Lien Claimant must (i) file a lawsuit against the party who owes them money, and they must (ii) file a Notice of Filing of Action for Claim on Mechanics and Materialmen’s Liens (“Notice of Action”).  Not only must these steps be done, but they must be done correctly and in compliance with the Georgia Mechanic’s and Materialmen’s Lien Act.  In order to do so, you will need a Georgia construction lawyer to help you meet all of the requirements.  If all of the necessary steps are taken in a timely manner, then the Claim of Lien does not expire and it continues in force beyond the one year anniversary of filing the lien.

Exceptions to Filing A Lawsuit: Sometimes, a mechanic’s Lien Claimant is prohibited from filing a lawsuit against the party who owes them money–this would most likely happen if the party who owed the money filed for bankruptcy protection.  This or any other scenario requires an experienced, Georgia Construction Lawyer in order to advise the Lien Claimant of the steps necessary to perfect and preserve its lien in Georgia.

How Can a Real Property Owner Shorten the Validity of a Construction Lien? Earlier, we advised that Georgia Liens are (initially) valid for one year from the date the lien was filed; if additional steps are not taken by the Lien Claimant, then the lien will expire.  The real property owner may file a Contest of Lien which shortens the time the Lien Claimant has to file its collection lawsuit, file the Notice of Action, etc. from the one-year anniversary to 60 days from the date of the filing of the Contest of Lien.  Of course, if the Georgia Lien Claimant meets its obligations to perfect its lien within this shortened period, then the Georgia Materialmen’s Lien survives and continues beyond the sixty day period.

Please contact the Cobb Law Group if you have any questions regarding the filing of Georgia liens, Georgia’s Construction Lien Laws, perfecting and enforcing liens in Georgia, or the expiration of liens in Georgia.

As though of you in the construction know, properly filed Claims of Liens (such as construction liens, mechanic’s liens, materialmen’s liens, suppliers liens, etc.) help contractors, subcontractors and suppliers get paid in the State of Georgia.  How do Claims of Liens help you get paid?

Although this may be an over-simplification, properly filing a lien helps you obtain collateral for your debt.  In other words, let’s assume that you are a material supplier on a construction project in Georgia, and let’s assume that you haven’t been paid for all of the materials which you supplied.  The person who purchased the materials from you, of course, owes you for the materials.  In addition, however, the real estate where the construction occurred can be “liened” for the amount of the debt.  This gives the material supplier an interest in the real estate which, if the material supplier does not receive payment, he has the right to foreclose upon the lien and sell the real estate to pay his debt.

Again, this is a very simplified explanation of Georgia’s Lien Laws, but it makes sense.  Throughout the United States, there are differing versions of Liens Laws, but they are all of the benefit of those who are not paid on construction process.

The theory behind Claims of Liens goes something like this: American land owners have been historically seen as the “landed gentry” which implies they have money and education and that they protect those who are less fortunate.  Conversely, those working on construction projects have been historically perceived as less educated and a part of the working class.  Thus, the real property owners have a duty to make sure that those working on the construction project gets paid.

In addition, it is undisputed that the materials, the labor, the equipment, the skill which those working on the construction project bring to the project have enhanced the value of the real estate, that is, the subcontractor or supplier has “improved” the project up to the value of the improvements made by the subcontractor or supplier.  Imagine a marble supplier providing $500,000 worth of marble for the lobby and conference rooms of a building; the marble is installed, but the marble supplier is not paid for its marble.  The office building has increased in value because it has a marble lobby and marble conference rooms so it is only equitable (or fair) that the marble supplier be permitted to file a Claim of Lien against the office building for the value of the unpaid materials.  Furthermore, if the debt is not collected, then the marble supplier has the right to force the sell of the office building to recover its money.

Again, this entry is meant to be a very rudimentary explanation of Claims of Liens; Georgia’s Mechanics and Materialmen’s Lien Laws have very strict deadlines and requirements which must be strictly followed.  If you have accounts receivable on a construction project anywhere in the State of Georgia, contact us to see if your claim is lienable.

A potential client just called with a wonderful question: he had filed a Claim of Lien in Georgia, but he wanted to know if we would enforce his lien rights even though we did not file his original lien.

Yes, is the answer.

There are many lien services–and even some law firms–that only file a client’s mechanic’s liens, but they do not help their clients enforce their lien rights.  So, many Georgia lien claimants are left to handle the rest of the matter themselves, but they do not know what to do.  We are a full-service, construction and lien law firm with a statewide practice.  So, if you have a materialmen’s lien and you need assistance enforcing your lien rights, then please contact us.

Don’t Miss Your Lien Deadline: If we prepared and filed a client’s original construction lien, then we remind them of the statute of limitations on lien enforcement in Georgia; however, I am constantly surprised to learn how many otherwise valid liens expire simply because the lien claimant did not know that liens expire! A Claim of Lien in Georgia expires one-year from the date your materialmen’s lien was filed unless you (i) file a lawsuit against the person or entity with whom you contracted, and (ii) file a Notice of Filing of Action with the clerk of court in the county where the construction project occurred.  If you fulfil these requirements before the lien deadline, then your materialmen’s lien will continue to be enforceable.

You Will Probably Have to Hire a Lawyer: I am not trying to be self-serving, but it a simple fact that Georgia courts will not let most businesses represent themselves.  If you are a sole practitioner, then you may be able to file your own lawsuit; however, Georgia prohibit corporations, LLCs, LLP’s and other legal entities from representing themselves in a lawsuit so they must hire a lawyer in order to enforce their lien rights.

When you contact us or any other lawyer, it is very useful if you are able to provide a copy of your recorded Georgia lien, proof that you sent the real property owner a copy of the lien, a copy of the Notice to Owner (if appropriate), the original real estate title work as well as the backup documentation (such as the past due invoices, contract, change orders, etc.); also, if you received any response from the property owner, the general contractor or anyone else after your filed the lien, please provide that information as well.  This will enable us to better evaluate the enforceability of your claim and help us advise you as to how to best proceed.  Finally, please remember to give us plenty of time to evaulate your lien and your options, draft and file a lawsuit, and meet all of Georgia’s other statutory requirements before your lien expires.

Please don’t let your mechanic’s lien expire, please contact a Georgia Construction Lawyer to help you enforce your lien rights; remember, if you don’t enforce your lien rights before the one-year anniversary of the date your Claim of Lien was filed, you will not be able to foreclose your Georgia lien.  Call us today!

So many people contact us regarding nonpayment issues on Georgia construction projects, and I thought you might appreciate reading a summary of options we usually discuss during our first conference with our clients:

First, we assess some fundamental issues by asking the following questions:

•    What type of services, labor or supplies did you provide?
•    What was the last day you actually provided services, labor or supplies to the project?
•    Have you been given any notices regarding failure to perform, defects, or other notices?
•    Were you providing services, labor or supplies on a privately-owned project, a project owned by a governmental entity (local, State of Georgia or federal project)?
•    Are they payment bonds covering the project?
•    Was your contract written or oral?
•    With whom was your contract (what tier are you)?
•    Did you have a personal guaranty from someone guaranteeing payment of the amounts you are owed?

Assuming that you were a general contractor, subcontractor or supplier who provided quality services, materials and labor in a timely fashion, then whomever you contracted with probably owes you the money you are due.   And, that is great.  However, Georgia construction laws, when correctly applied, may allow you to seek recovery of the debt from a third party.  Thus, our next assessment is whether there is any viable third-party who may also be liable for the debt.  This can get very technical and complex, but here are some of the common areas we explore:

•    Can a materialmen or mechanic’s lien be filed (which may make the real estate where your services, materials or labor was provided liable for the debt)?  Click here for more information on this topic!
•    Can you make a payment bond claim (which may make a third-party insurer liable for the debt)?
•    Can a Constructive Trust be claimed (which may make retainage or other monies owed to a higher tier) which may make provide a source of recovery for your debt?
•    Are there circumstances which allow a quantum meruit claim (which may make a third party liable for the debt based upon “fairness” issues)?
•    Is there a guarantor which can be pursued?

Needless to say, the more opportunities there are for recovery, then (i) the more likely the recovery will be made, (ii) the higher the recovery is likely to be, (iii) the more quickly the recovery will occur, and (iv) the lower your costs of collection will be.

Ultimately, then, how do you and your Georgia construction lawyer work to improve your recovery?

•    Periodically, review your contracts to make sure they comply with current regulations and statutes;
•    Obtain a personal guarantee and other useful information (click here for details!);
•    Learn all the various deadlines in Georgia for filing Lien Claims and for making payment bond claims (click here for some important Georgia Lien & Bond deadlines);
•    Learn the statute of limitations for filing suits to perfect your Georgia Mechanic’s Lien Claims, your private project payment bond claims, your local municipality, State or Georgia and federal government payment bond claims;

If you are looking for a Georgia Construction Law Firm who can handle your files anywhere in the State of Georgia and who understand Georgia’s Construction Lien Laws, Subcontractor Laws, Miller Act and Miller Act Claims, please contact the Cobb Law Group to see how we can improve your collection rate!

Once again, the Cobb Law Group is please to be a supporter of the Thomasville Antique Show.  This amazing show has been described as one of the best “small” antique shows in the country.  The quality of antiques available are unparalleled in quality, but it is the people behind the Show that make it so successful.  In fact, this success has raised over $1,650,000 for the benefit of local children’s programs since its inception in the last 22 years!

The dealers at the show are all amazing–they are friendly, intelligent, and highly regarded in their fields and they come from across the country–from Florida to Maine to the west.  They always seem willing to help the novice collector and advise the experienced collectors.  Of course, this amount of money could not be raised with the dedication (and donations and time and creativity) of the leaders and volunteers.  This groups has been working diligently for a year to guarantee another successful Show.  The speakers are always world-class and very educational, and this year’s speakers promise the same.   Susan Crater & Libby Cameron will be speaking on “Sister Parish Design”, Ron Morgan will speak on “A Glass Act” and give a floral design workshop, and Thomas Jayne will speak on “The Finest Rooms in America”.  Plus, there are antique appraisals and many other exciting events associated with the Show.

Ultimately, the time is donated and the dealers and speakers arrive each year because of the shoppers.   Some are generalists and some come looking for specific items; some spend a little money and others a lot, but everyone seems to enjoy the quality of the items for sale and the accessability to some of the finest dealers in the county.

The Cobb Law Group salutes the Thomasville Antique Shows–it’s leaders, volunteers, dealers, and shoppers.  If you are looking for something new and interesting to do this weekend, come on out and shop the show for a good cause!

If you have been to the show, please let us hear about your experience!