4. Creation and Cancellation of "Preliminary" Lien Notice?

The three (3) OCGA Code Sections Listed below describe the creation, cancellation of preliminary lien rights

OCGA Section 44-14-361.3 Preliminary notice of lien; form; notice to contractor; filing; necessity of preliminary notice.  

(a) Prior to filing a claim of lien, a person having a lien under

paragraphs (1) through (8) of subsection (a) of Code Section 44-14-361 may at such person's option file a preliminary notice of lien rights. The preliminary notice of lien rights in order to be effective shall:

(1) Be filed with the clerk of superior court of the county in which the real estate is located within 30 days after the date a party delivered any materials or provided any labor or services for which a lien may be claimed;

(2) State the name, address, and telephone number of the potential lien claimant;

(3) State the name and address of the contractor or other person at whose instance the labor, services, or materials were furnished;

(4) State the name of the owner of the real estate and include a description sufficient to identify the real estate against which the lien is or may be claimed; and

(5) Include a general description of the labor, services, or materials furnished or to be furnished.

(b) A party filing a preliminary notice of lien rights except a contractor shall, within seven days of filing the notice, send by registered or certified mail a copy of the notice to the contractor on the property named in the notice or to the owner of the property. The lien claimant may rely on the building permit issued on the property for the name of the contractor.

(c) The clerk of each superior court shall maintain within the records of that office a record separate from all other real estate records in which preliminary notices specified in subsection (a) of this Code section and affidavits specified in subsection (c) of Code Section 44-14-361.4 shall be filed. Each such notice and affidavit shall be indexed under the name of the owner as contained in the preliminary notice. The clerk shall collect a filing fee of $5.00 for the filing of each preliminary notice.

(d) A person having a lien under paragraphs (1) through (8) of subsection (a) of Code Section 44-14-361 may enforce the lien without filing a preliminary notice of lien.

OCGA Section 44-14-361.4 Cancellation or expiration of preliminary notice; demand  

(a) A preliminary notice of lien rights filed pursuant to Code Section 44-14-361.3 shall be dissolved if it is canceled and a preliminary notice also expires and is dissolved under any of the following conditions:

(1) The lien has been waived in writing by the lien claimant;

(2) The time has expired for filing the claim of lien as required in Code Section 44-14-361.1;

(3) On residential property, a demand for filing of a claim of lien has been sent by registered or certified mail to the potential lien claimant at the address specified in the preliminary notice of lien rights and at least ten days have elapsed since the date of such mailing without the filing of a claim of lien; or

(4) On all property except residential property, a demand for filing of a claim of lien has been sent by registered or certified mail to the potential lien claimant at the address specified in the preliminary notice of lien rights and at least ten days have elapsed since the date of such mailing without the filing of a claim of lien; provided, however, the demand for filing of a claim of lien shall not be sent until the contractor's contract is substantially complete or until the potential lien claimant's contract has been terminated or the potential lien claimant has abandoned the contract.

(b) A demand for filing of claim of lien shall contain the same information required to be contained in the preliminary notice of lien rights and shall contain the following statement addressed to the potential lien claimant:

"This demand was mailed to you on ____________ pursuant to Code Section 44-14-361.4. You are notified that unless you file a claim of lien with respect to this claim on or before the tenth day after said date of mailing your right to claim a lien will be dissolved."

(c) If a demand for filing of a claim of lien is mailed as provided in this Code section and no claim of lien is filed within ten days after said date of mailing, the preliminary notice of lien rights may be canceled as provided in this subsection. In order to obtain cancellation, the person who mailed the demand or his attorney shall file with the clerk of superior court a copy of the demand and his or her affidavit that the demand was mailed as provided in paragraph (3) or (4) of subsection (a) of this Code section and that ten days have elapsed since said date of mailing without the filing of a claim of lien by the potential lien claimant. Upon such filing, the clerk of superior court shall cancel of record the preliminary notice of lien rights.

OCGA Section 44-14-362 Cancellation of preliminary notice upon final payment; form of cancellation.  

(a) Upon final payment after all labor, services, or materials have been furnished, a person who has filed a preliminary notice of lien rights shall either deliver a cancellation of the preliminary notice of lien rights at the time of final payment or cause the notice to be canceled of record within ten days after final payment. Any person who fails to so cancel a preliminary notice shall be liable to the owner for all actual damages, costs, and reasonable attorney's fees incurred by the owner in having the preliminary notice canceled.

(b) The cancellation required under this Code section shall be in the following form:

Clerk, Superior Court

of ______________ County

You are authorized and directed to cancel of record the preliminary notice of lien rights which we filed on the property owned by (state name of owner) on (give date) and recorded by you in Book ______, Page ______, of preliminary notices kept by you.

This ______ day of ______, 19 ______. _________ Lien claimant or attorney

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5. How a Contractor's Affidavit Dissolves an OCGA 44-14-361(a) Mechanic's Lien

OCGA Section 44-14-361.2 Dissolution of lien.  

(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:

(1) The lien has been waived in writing by lien claimant; or

(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 have 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.

(b) As used in paragraph (2) of subsection (a) of this Code section, the term:

(1) "Person other than the owner" shall not include a subcontractor.

(2) "Final disbursement" of the contract price means payment of the agreed price between the owner and contractor for the improvements made upon the real estate or the reasonable value of the labor, services, and materials incorporated in the improvements upon the real estate and shall include payment of the balance of the contract price to an escrow agent.

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6. The Creation of Mechanics or Materialmen's Liens by one not in a Direct Contractual Relationship (NO Privity of Contract)

OCGA Section 44-14-361.5 Liens of persons without privity of contract.  

(a) To make good the liens specified in paragraphs (1), (2), and (6) through (9) of subsection (a) of Code Section 44-14-361, any person having a right to a lien who does not have privity of contract with the contractor and is providing labor, services, or materials for the improvement of property shall, within 30 days from the filing of the Notice of Commencement or 30 days following the first delivery of labor, services, or materials to the property, whichever is later, give a written Notice to Contractor as set out in subsection (c) of this Code section to the owner or the agent of the owner and to the contractor for a project on which there has been filed with the clerk of the superior court a Notice of Commencement setting forth therein the information required in subsection (b) of this Code section.

(b) Not later than 15 days after the contractor physically commences work on the property, a Notice of Commencement shall be filed by the owner, the agent of the owner, or by the contractor with the clerk of the superior court in the county in which the project is located. A copy of the Notice of Commencement shall be posted on the project site. The Notice of Commencement shall include:

(1) The name, address, and telephone number of the contractor;

(2) The name and location of the project being constructed and the legal description of the property upon which the improvements are being made;

(3) The name and address of the true owner of the property;

(4) The name and address of the person other than the owner at whose instance the improvements are being made, if not the true owner of the property;

(5) The name and the address of the surety for the performance and payment bonds, if any; and

(6) The name and address of the construction lender, if any. The contractor shall be required to give a copy of the Notice of Commencement to any subcontractor, materialman, or person who makes a written request of the contractor. Failure to give a copy of the Notice of Commencement within ten calendar days of receipt of the written request from the subcontractor, materialman, or person shall render the provision of this Code section inapplicable to the subcontractor, materialman, or person making the request.

(c) A Notice to Contractor shall be given to the owner or the agent of the owner and to the contractor at the addresses set forth in the Notice of Commencement setting forth:

(1) The name, address, and telephone number of the person providing labor, services, or materials;

(2) The name and address of each person at whose instance the labor, services, or materials are being furnished;

(3) The name of the project and location of the project set forth in the Notice of Commencement; and

(4) A description of the labor, services, or materials being provided and, if known, the contract price or anticipated value of the labor, services, or materials to be provided or the amount claimed to be due, if any.

(d) The failure to file a Notice of Commencement shall render the provisions of this Code section inapplicable. The filing of a Notice of Commencement shall not constitute a cloud, lien, or encumbrance upon or defect to the title of the real property described in the Notice of Commencement, nor shall it alter the aggregate amounts of liens allowable, nor shall it affect the priority of any loan in which the property is to secure payment of the loan filed before or after the Notice of Commencement, nor shall it affect the future advances under any such loan. Nothing contained in this Code section shall affect the provisions of Code Section 44-14-361.2.

(e) The clerk of each superior court shall file the Notice of Commencement within the records of that office and maintain an index separate from other real estate records or an index with the preliminary notices specified in subsection (a) of Code Section 44-14-361.3. Each such Notice of Commencement shall be indexed under the name of the true owner and the contractor as contained in the Notice of Commencement.

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7. How does an Owner Bond off a Mechanics and Materialmen's Lien filed on real property?

OCGA Section 44-14-364 Release of lien on filing of bond; amount; real property bonds; schedule, affidavit, and recordation.  

(a) When any person entitled under this part to claim a lien against any real estate located in this state files his lien in the office of the clerk of the superior court of the county in which the real estate is located, the owner of the real estate or the contractor employed to improve the property may, before or after foreclosure proceedings are instituted, discharge the lien by filing a bond in the office of that clerk. The bond shall be conditioned to pay to the holder of the lien the sum that may be found to be due the holder upon the trial of any action that may be filed by the lienholder to recover the amount of his claim within 12 months from the time the claim becomes due. The bond shall be in double the amount claimed under that lien and shall be either a bond with good security approved by the clerk of the court or a cash bond, except in cases involving a lien against residential property, in which event the bond shall be in the amount claimed under the lien. Upon the filing of the bond provided for in this Code section, the real estate shall be discharged from the lien. With respect to property bonds, the clerk shall not accept any real property bond unless the real property is scheduled in an affidavit attached thereto setting forth a description of the property and indicating the record owner thereof, including any liens and encumbrances and amounts thereof, the market value, and the value of the sureties' interest therein, which affidavit shall be executed by the owner or owners of the interest; the bond and affidavit shall be recorded in the same manner and at the same cost as other deeds of real property. So long as the bond exists, it shall constitute a lien against the property described in the attached affidavit.

(b) The clerk of the superior court shall have the right to rely upon the amount specified in the claim of lien in determining the sufficiency of any bond to discharge under this Code section. The failure to specify both the amount claimed due under the lien and the date said claim was due shall result in such lien not constituting notice for any purposes.

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8. Rules Concerning Waiver of Liens

OCGA Section 44-14-366 Waiver of lien or claim upon bond in advance of furnishing labor, services, or materials void; interim waiver and release upon payment; unconditional waiver and release upon final payment; affidavit of nonpayment.  

(a) A right to claim a lien or to claim upon a bond may not be waived in advance of furnishing of labor, services, or materials. Any purported waiver or release of lien or bond claim or of this Code section executed or made in advance of furnishing of labor, services, or materials is null, void, and unenforceable.

(b) No oral or written statement by the claimant purporting to waive, release, impair, or otherwise adversely affect a lien or bond claim is enforceable or creates an estoppel or impairment of claim of lien or claim upon a bond unless:

(1) It is pursuant to a waiver and release form duly executed by claimant prescribed below; and

(2) The claimant has received payment for the claim as set forth in subsection (f) of this Code section.

(c) When a claimant is requested to execute a waiver and release in exchange for or in order to induce payment other than final payment, the waiver and release must follow substantially the following form, and the priority of such claimant's lien rights, except as to retention, shall thereafter run from the day after the date specified in such Interim Waiver and Release upon Payment form: [Interim Form listed below]

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(d) When a claimant is requested to execute a waiver and release in exchange for or in order to induce payment of final payment, the waiver and release must follow substantially the following form: [Unconditional Form listed below]

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(e) Nothing contained in this Code section shall affect:

(1) The enforceability of any subordination of lien rights by a potential lien claimant to the rights of any other party which may have or acquire an interest in all or any part of the real estate, factories, railroads, or other property for which the potential lien claimant has furnished labor, services, or material, even though such subordination is entered into in advance of furnishing labor, services, or material and even though the claimant has not actually received payment in full for its claim;

(2) The enforceability of any waiver of lien rights given in connection with the settlement of a bona fide dispute concerning the amount due the lien claimant for labor, services, or material which have already been furnished;

(3) The validity of a cancellation or release of a recorded claim of lien or preliminary notice of lien rights; or

(4) The provisions of paragraph (2) of subsection (a) of Code Section 44-14-361.2, paragraphs (3) and (4) of subsection (a) and subsections (b) and (c) of Code Section 44-14-361.4, or Code Section 44-14-364.

(f) (1) When a waiver and release provided for in this Code section is executed by the claimant, it shall be binding against the claimant for all purposes, subject only to payment in full of the amount set forth in the waiver and release.

(2) Such amounts shall conclusively be deemed paid in full upon the earliest to occur of:

(A) Actual receipt of funds;

(B) Execution by the claimant of a separate written acknowledgment of payment in full; or

(C) Thirty days after the date of the execution of the waiver and release, unless prior to the expiration of said 30 day period the claimant files a claim of lien or files in the county in which the property is located an Affidavit of Nonpayment, using substantially the following form: [Affidavit of Nonpayment listed below]

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(3) A claimant who is paid, in full, the amount set forth in the waiver and release form after filing an Affidavit of Nonpayment shall upon request execute in recordable form an affidavit swearing that payment in full has been received. Upon recordation thereof in the county in which the Affidavit of Nonpayment was recorded, the Affidavit of Nonpayment to which it relates shall be deemed void.

(4) Nothing in this Code section shall shorten the time within which to file a claim of lien.

(5) A waiver and release provided in this Code section shall be suspended upon filing of an Affidavit of Nonpayment until payment in full has been received.

(6) The claimant may rely upon the information contained in the waiver and release form when completing for filing the Affidavit of Nonpayment or claim of lien.

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