July 23

So You’ve Filed a Construction Lien In Georgia–What Next?

Assuming you properly filed your construction lien in Georgia, what should be your next steps to collect the balance you are due on the lien?

The answer to this question depends on your customer. A credit manager should determine the next step to take based on his/her view of this particular customer. In many cases, a credit manager has good reason to believe that the property will be sold or the debt resolved within a reasonable time after the filing of the lien. In such a case, the credit manager should simply record the lien and wait. The lien holder’s interest is protected and to take further steps may just costs the company unnecessary legal expenses. In other cases, the credit manager may be aware of significant disputes as to the project and the amount due the lien claimant. In this case also, the best step may be to simply wait a while and see what happens–the property owner or contractor may call and attempt to reach a reasonable settlement of the debt. Pursuing quick litigation in such a case may draw the company into long and expensive litigation; in some such cases litigation may be unavoidable, however, I recommend that the client wait a reasonable time to see what happens before taking such risks. In other cases, the debt is clearly owed, the work or products were delivered without problem, but the contractor or owner has no reasonable reason for non-payment. In such cases, I recommend that the lien claimant proceed to file suit.

Regardless of the path you choose, the law requires that you file suit by a certain time in order to maintain your lien rights. OCGA 44-14-361.1(a)(3) requires the commencement (filing) of a suit for the recovery of the amount of the party’s claim within 365 days from the date of filing for record of his or her claim of lien. In cases where this day falls on a weekend or holiday, you should refer to the rules set forth in OCGA 1-3-1, as laid out in my previous article detailing the time you have to file a claim of lien.

Liens are vital to being paid for work performed or goods delivered. I have seen cases in which the contractor goes bankrupt or “runs for the hills”, but the lien, properly maintained and perfected, allows recovery against the property. The value of such a lien cannot be ignored. Be sure to have an attorney file a lawsuit to maintain your lien within the time limits required.

One last item of note, “within 30 days after commencing such lien action, the party claiming the lien shall file a notice with the clerk of the superior court of the county wherein the subject lien was filed. There ar eccertain requirements that must be fulfilled in this notice.

July 22

How Many Days Do You Have to File a Construction Lien?

In 2009 the Georgia legislature updated the lien law, erasing much of the confusion that surrounded this topic in the past. O.C.G.A. 44-14-361.1 states that the contractor, architect, or material supplier must file his/her lien within 90 days after the completion of the work, the furnishing of the architectural services, or the furnishing or performing of such surveying or engineering services or within 90 days after the material or machinery is furnished. [See 0CGA 44-14-361.1(a)(2)]. Additionally, any confusion as to the computation of time is controlled by O.C.G.A. 1-3-1, which states “Except as otherwise provided by time period computations specifically applying to other laws, when a period of time measured in days, weeks, months, years or other measurements of time except hours is prescribed for the exercise of any privilege or the discharge of any duty, the first day shall not be counted but the last day shall be counted; and, if the last day falls on Saturday or Sunday, the party having such privilege or duty shall have through the following Monday to exercise the privilege or to discharge the duty. When the last day prescribed for such action falls on a public and legal holiday as set forth in Code Section 1-4-1, the party having the privilege or duty shall have through the next business day to exercise the privilege or to discharge the duty. When the period of time prescribed is less than seven days, intermediate Saturdays, Sundays, and legal holidays shall be excluded in the computation.” [OCGA 1-3-1(c)(3)]. Please take care to file your claim of lien within the time period required in order to properly secure your lien rights.

You should also be aware that “No later than two business days after the date the claim of lien is filed of record, the lien claimant shall sent a true and accurate copy of the claim of lien by registered or certified mail or statutory overnight delivery to the owner of the property or, if the owner’s address cannot be found, the contractor, as the agent of the owner; provided, however, if the property owner is an entity on file with the Secretary of State’s Corporation Division, sending a copy of the claim of lien to the entity’s address or the registered agent’s address shall satisfy this requirement.” [OCGA 44-14-361(a)(2)].

Lastly, in all cases in which a notice of commencement is filed with the Clerk of the Superior Court pursuant to subsection (b) of Code Section 44-14-361.5, a lien claimant shall also send a copy of the claim of lien by registered or certified mail or statutory overnight delivery to the contractor at the address shown on the notice of commencement. [See OCGA 44-14-361(2)].

These steps are just the steps required to properly file a claim of lien. In order to maintain that claim, further steps are required. We will discuss those steps in future articles. As you can see, properly filing a lien claim is quite complex, and best left to professionals.

July 17

When can you collect against the property of individual members of an unincorporated association in Georgia?

When you sue an unincorporated association in Georgia, “No such judgment shall be enforced against the individual property of any member of an unincorporated association unless the member has personally participated in the transaction for which the action was instituted and has been served with process as provided by law.” OCGA ยง9-2-25(d) [see Piney Grove Baptist Church v. Goss]. When the organization is formed for profit purposes, it is deemed a partnership in Georgia, and all members can be held liable for its debts. We will discuss non-profit organizations below.

As to non-profit associations, let’s break this code section (9-2-25) out further so it is easier to understand. In order to collect against an individual member, they should be served with process (and preferably named as a Defendant). Second, the individual must have personally participated in the transaction for which the action was instituted. What does it mean to personally participate in the transaction? There are not many cases to provide guidance in answering this question. Certainly, if an association member signed mortgage documents on behalf of the church, then they would have personally participated in the transaction. If the member assisted in the procurement or negotiation of the terms of the mortgage, then they likely have personally participated. What about if the member voted in favor of taking out the mortgage in question when the issue was put to a vote? I believe this would be considered participation, though I wouldn’t call it a slam dunk. Others have argued that even knowledge of the transaction without objecting to the transaction may be enough to hold a member liable. If you are a creditor of such an origination or church, naming as many members as feasible as defendants would increase your chances of collecting your judgment. Good record keeping may assist in your recovery. We would recommend listing the reasons why a particular member materially participated in the transactions directly in your Complaint.

This article also shows the dangers of becoming a member of an unincorporated association. The costs of forming a corporation or LLC are relatively low in relation to the risks involved in many of these transactions.

If you have any questions about this article, please contact David Stuart by email at jdavidstuart@stuartattorneys.com.

July 16

Can you sue an Unincorporated Association in Georgia?

Surprisingly to me, the answer to this question is YES! I had always thought that, as far as any unincorporated group goes, you could sue the principals of the group doing business as the group name. Turns out, you can sue the group directly . OCGA 9-2-25 states that “Actions may be maintained against and in the name of any unincorporated organization or association for any cause of action for or upon which the plaintiff therein may maintain such an action against the members of the organization or association.” The most common application of suing an unincorporated association are actions against religious groups and churches (there is apparently, I have learned, a significant group of people than think incorporating your church is ungodly), but there are other organizations out there that are not incorporated. We have found instances where title to real estate is held in the name of the unincorporated association, so naming this association as a defendant would allow us greater access to assets that may be used to pay a judgment. Of course, some courts charge an additional filing fee for an additional defendant, and every defendant still must be served with process, so you should make sure it is cost efficient to name an additional entity before moving forward. If you have any questions about this article, please contact David Stuart by email.