Georgia Materialman's Lien Disputes Course & Book

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  • Affidavit Sufficient to Dissolve Lien, Even If Untrue

    Affidavit Sufficient to Dissolve Lien, Even If Untrue

    One way to defeat a subcontractor’s and materialmen’s lien remedy is to have an affidavit filed under O.C.G.A. 44-14-361.2(a)(2). That statute provides as follows:

    (a) The special lien specified in subsection (a) of Code Section 44-14-361 shall be dissolved if the owner, purchaser from owner, or lender providing construction or purchase money or any other loan secured by real estate shows that: . . .

    (2)

    (A) They or any of them have obtained the sworn written statement of the contractor or person other than the owner at whose instance the labor, services, or materials were furnished, or the owner when conveying title in a bona fide sale or loan transaction, that the agreed price or reasonable value of the labor, services, or materials has been paid or waived in writing by the lien claimant; and
    (B) When the sworn written statement was obtained or given as a part of a transaction:
    (i) Involving a conveyance of title in a bona fide sale;
    (ii) Involving a loan in which the real estate is to secure repayment of the loan; or
    (iii) Where final disbursement of the contract price is made by the owner to the contractor there was not of record, at the time of the settlement of the transaction a valid preliminary notice or claim of lien which had not been previously canceled, dissolved, or expired.

    In a 1993 case, the Georgia Supreme Court had to decide whether the affidavit filed had to be true to defeat the lien remedy? Interestingly, they held that it did not have to be true; the affidavit merely had to comply with the statutory requirements “on its face”. (Of course, that doesn’t mean there can’t be consequences for perjury!)

    In the case of DeKalb Cnty. v. J & A Pipeline Co., 263 Ga. 645, 648, 437 S.E.2d 327, 331 (1993), the Georgia Supreme Court held:

    “Under the lien laws, an owner can defeat the subcontractors’ and materialmen’s alternative remedy by obtaining an affidavit from the general contractor which, on its face, comports with the statutory requirements of OCGA § 44–14–361.2(a)(2). If the owner fails to secure this affidavit or if the affidavit which the owner secures does not comport with the statutory requirements, the lien remedy is not defeated. If, however, the owner secures an affidavit which, on its face, does comport with the statutory requirements, the lien remedy will be defeated notwithstanding the falsity of the affidavit.”

  • Lien Action Invalid When Filed 1 Day Too Late

    One way to dispute a lien claim is to scrutinize the timeline, and find that the lien claimant was not timely in taking required actions. The case Cent. Atlanta Tractor Sales, Inc. v. Athena Dev., LLC, 289 Ga. App. 355, 657 S.E.2d 290 (2008) shows that a lien claim can be defeated even when the equipment supplier files their case just 1 day too late.

    In 2003, property owner Athena Development, LLC (“Athena”) entered into a contract with West Georgia Excavation, Inc. (“WGE”) for construction work on a project in Powder Springs Georgia.

    Central Atlanta Tractor Sales, Inc. (“CATS”) supplied equipment to WGE for the project. The last piece of equipment was returned to CATS on February 16, 2004, which was the last day WGE did work on the construction project.

    CATS claimed it wasn’t paid $101,090.75 for the use of the equipment by WGE, and on March 12, 2004 it filed a claim of lien against the project.

    Athena’s surety was Accredited Surety & Casualty Company, Inc. (“Accredited Surety”), and on July 28, 2005 a bond was provided to discharge the lien by CATS on the project. (This type of bond is permitted by O.C.G.A. 44-14-364).

    CATS (the equipment supplier) sued WGE (the contractor) on February 16, 2005 on the $101,090.75 claim.

    Was this lawsuit timely filed within “12 months from the time the [claim] shall become due” as required by O.C.G.A. 44-14-361.1(a)(3)? Quite clearly, the lawsuit was filed 366 days after the last day WGE did work, which would be 1 day too late.

    But CATS argued for an exception. They argued that sums due under a rental contract could not yet be determined until the equipment was returned to them such that they had a chance to inspect it for damage. CATS argued that its “claim” was not “due” until the inspection date which was within 12 months of when they filed their lawsuit.

    The Georgia Court of Appeals disagreed, however. It held that the “due date” does not include any inspection period, but is determined from the last date the equipment was provided for the improvement of the real estate. Because CATS filed 1 day too late, they could not recover on the bond.