Construction Law is a genre of law that is very detailed because its nexus operates on a concept in the United States that has been around since the age of Industrialization and that is relating to labor unions. Depending on where one travels within the United States to seek employment pertaining to construction work, they are potentially eligible to join a laborer’s union. What many of these labor unions do is to achieve a standard wage and benefits that construction employers pay construction worker within that specific state of geographic territory. Some of these unions have become quite corrupt over the years and many workers have sought out other deals with prospective employers in order to organize how they are going to obtain a fair and equitable salary for the wages that they earn. Earning a fair salary in the construction field was not always a guarantee and so, many people looked for viable alternatives to obtain their fair salary.
One of these methods that was explored as an alternative to labor unions was the concept of getting a labor lien from the construction company on the project that they are working on, (“Competing Mechanics’ and Federal Tax Liens Conflicts Triggered By a General Contractor’s Default.”, 1959). What this typically means in day-to-day practice is that there is a lien that takes place that gives the laborers a prospective security interest in property until they have been paid a salary for their work on that prospective property, (“Competing Mechanics’ and Federal Tax Liens Conflicts Triggered By a General Contractor’s Default.”, 1959). What makes these prospective liens particularly complicated is that if the laborer is not paid for the work that they have completed on the project in which they have a lien, then they retain the lawful possession of the property until the owner and/or contractor pays the full amount for the labor that was performed on the property, (“Competing Mechanics’ and Federal Tax Liens Conflicts Triggered By a General Contractor’s Default.”, 1959). A further subdivision of these labor liens is that they can even be distributed to minimal laborers and suppliers, (“Competing Mechanics’ and Federal Tax Liens Conflicts Triggered By a General Contractor’s Default.”, 1959). For example, a laborer who is merely painting a finishing coat and also a supplier of the paint on the project can get a lien on their labor or supplies supplied to the project if they are not in fact paid, (“Competing Mechanics’ and Federal Tax Liens Conflicts Triggered By a General Contractor’s Default.”, 1959).
In considering how a specific laborer gets the “right” to file a lien, the issue becomes even more complex. If everyone were allowed to do so, we would see a prospective quite complicated issue that would result in an influx in cases in the construction law field that the courts perhaps would not be able to handle. That being said, in order to qualify for one of these construction liens, the right principally arises from an operation of law and in other circumstances, it arises from an express contract, which is drafted when the laborer begins their work on the corresponding project, (“Basics of Filing a Mechanic’s/Material’s Lien in Georgia,” 2014). In zeroing in on where this right to a lien originates, one usually needs to look to the statute in order to derive the right to file the lien, (“Basics of Filing a Mechanic’s/Material’s Lien in Georgia,” 2014). So long as the prospective laborer or contractor approaches to property owner and declares an intent to file a lien on the corresponding construction project, then the lien becomes in full effect, (“Basics of Filing a Mechanic’s/Material’s Lien in Georgia,” 2014). Then, if the property owner does not pay the lien at the end of the construction contract, then the laborer, contractor or supplier who filed the lien then has a claim to file against the property owner, (“Basics of Filing a Mechanic’s/Material’s Lien in Georgia,” 2014). What ends up happening if the property owner tries to sell the complete property to someone else is that the amount of the lien is still tacked onto the property and has to be resolved before the property changes title, (“Basics of Filing a Mechanic’s/Material’s Lien in Georgia,” 2014).
This is an enormous issue because these liens can go anywhere between $500 to into the $100,000 range depending on the nature of the project. One could be thinking of a small residential remodel all the way to a skyscraper being constructed in Atlanta, for example.
In order to see how to see how this law is applied in Georgia, it is best to first look to the Georgia statute and then see if there is any relevant case law to support a way for a contractor to be protected if they are not paid out their prospective lien. When considering which statute to look to in the Georgia code, the provision pertaining to construction labor and supply liens can be found in the O.C.G.A. § 44-14-361(a)(2) provision of the code, (“Basics of Filing a Mechanic’s/Material’s Lien in Georgia,” 2014). What is necessary to understand when filing in Georgia is that each and every state has a different practice of filing in order to curtail certain labor unions that may be in place in that corresponding state. In Georgia, it is essential to prove whether the lien claim that was filed is in fact valid due to all of the potential fraud that could prospectively arise from such cases. In order to do this, there is a test done to see if the corresponding prerequisites are met in order to prove that the lien claim is valid. Some examples of aspects considered in this test are: filing of the claim within 90 days of completion of the job with the Country Superior Court that is located where the property where the labor was performed is located, the lien has to include a date of expiration for the property owner to pay in order to be enforceable, and substantial compliance from the party to prove that the lien was in fact apart of the contract that was drafted pertaining to their work agreement, (Oglethorpe Savings & Trust Co. v. Morgan, 120). When considering when the statute of limitations expires for a contractor, laborer or supplier to recovery the money that they had on lien for the work they completed, the statute dictates that the individual has 365 days from when the lien was originally filed to attempt to claim the lien from the property owner, (“Basics of Filing a Mechanic’s/Material’s Lien in Georgia,” 2014).
Even though this statute is quite clear as stipulated under Georgia law, it is still not the end all authority on what transpires if there is a contractor property owner relationship that does not exactly fit within the parameters as stipulated in the statute. The best way for an attorney or a contractor to investigate what their rights are pertaining to how to collect on the property lien that they have is to look to relevant case law. One aspect that is important during this process is to limit the case law to Georgia cases if possible in order to recover the lien because cases of this nature are typically a state law issue. One should only look to the federal case law or the law of alternative states when there is no case law available to potentially support their prospective claim. Thus, it is wise to see what Georgia has to offer in the way of case law relating to this issue.
In reviewing what was available for Georgia case law pertaining to construction labor liens, I found two prospective cases that could be related to the issue at hand. The relevant precedents from that case law in Georgia will be discussed on a case by case basis in the following sentences. The first case that was discovered was the Gellis v. B.C.I. Const., Co. Inc. from 1978. In this particular case a contractor brought an action against a construction company to recover a lien that was due on the property owner’s property title at the end of the construction contract, (Gellis v. B.L.I. Const. Co., Inc., 1978). The case at trial court was won by the contractor and the lender appealed, (Gellis v. B.L.I. Const. Co., Inc., 1978). When the case was appealed the judge set forth the following precedent in order to satisfy whether the lien could in fact be recovered by the contactor: (1) the lender’s notice to the general contractor of the lien’s approval was not suffiencient to satisfy a special lien superior to the lender’s security deed on the theory that the lendor expressly or impliedly in fact consented to the improvements that were completed sufficient to contract law that constituted a reliance by the contractor and (2) the trial court made an error of equitable estoppel when holding for the contractor, (Gellis v. B.L.I. Const. Co., Inc., 1978). What this case is stating is that the establishment of a lien has to be followed in a very precise way and an implied contract does not always satisfy this for there to be a lien, (Gellis v. B.L.I. Const. Co., Inc., 1978).
What Georgia contractors should consider is the necessity to ensure that they have followed the protocol of the lien as prescribed by the statute so that there are no issues enforcing the lien down the road. This is crucial when contractors are relying on these liens to get paid if the property owner fails to pay them. If any detail of the lien is not filed properly within the state of Georgia, the contractor has very little recourse. Additionally, it is recommended for contractors to proceed with caution when there is a third party lender involved. The reason for this is that it creates another party to the potential lien that could usurp the contractors rights if they did not perform their due diligence and file the lien properly. Typically, it is best for a contractor to consult with a construction law specialist in order to ascertain what is the best course of action for their individual case.
Works Cited
“Basics of Filing a Mechanic’s/Material’s Lien in Georgia.” Hall Booth Smith, P.C. 2014 Web. 12 April 2016.
“Competing Mechanics’ and Federal Tax Liens Conflicts Triggered By a General Contractor’s Default.” Yale Law Journal. 1959. Web. 12 April 2016.
Gellis v. B.L.I. Const. Co., Inc. 148 Ga. App. 527, (1978).
Oglethorpe Savings & Trust Co. v. Morgan, 149 Ga. 787, (1920).
