Construction Lien Errors–Including the Lien Costs in the Total Due

One of the most basic ways in which a creditor can destroy their chances of collecting on a construction lien is to include the costs of filing the lien itself in the total that is due on the project. Georgia law holds that the amount on the lien cannot exceed the contract price, and adding the lien costs into the total due will violate this provision. A lien is supposed to be for the labor services, or materials actually furnished on the particular job; legal and administrative expenses incurred in filing a lien do not count as services provided on a construction job. While you might be able to seek to recover such amounts directly from the contractor or owner in collections or in the event of litigation, you can’t collect the fees as part of any lien recovery. While there are some loopholes to this rule that may not doom your case in the event you included the lien fee in the total due, these loopholes are not cheap to use and not 100% perfect. At the end of the day, this is an avoidable error, and not including the lien fee in your total due could save you from a large headache. If you have any questions about construction liens, please contact our firm for advice specific to your particular case. All advice on this blog is general in nature and not intended as specific advice to your particular case or situation.

How to Torpedo Your Debt Collection Lawsuit in Georgia–Mistake 4

One common mistake we find is where the credit manager sends over a file for litigation without an updated spreadsheet or accounting showing each and every charge and payment made by the Defendant back to the point where the Defendant had a zero balance. We have seen cases where a client will allow a customer to buy $2o,000 or $50,000 worth of product every month, never paying off the previous balance in full before the next order is placed. Unraveling the payment stream can become a nightmare and is not the task best left to your attorney. If the case is an hourly case, the attorney will bill you significant time trying to decode your accounting system. If the case is a contingency case, the attorney will spend unnecessary hours on the case, and become discouraged from the paperwork. Worse, your opponent will turn the messy paperwork against you, accusing you of poor bookkeeping, claiming they have paid the bill. Even worse, the Judge is not going to spend the time it takes to decode a complex payment history, and may deny the creditor summary judgment, forcing a case to trial. In the long run, the creditor will either have to straighten out its own books or accept less money than it is owed to settle the account. Having a clean set of books increases a creditor’s chances of being paid in full, and a proper spreadsheet or summary bill increases the creditor’s chances of being paid.

How to Torpedo Your Debt Collection Lawsuit in Georgia–Mistake 3

The third mistake we see when it comes to filing and collecting a debt in Georgia with a lawsuit is the credit manager not updating and keeping current information on the customer. We see cases in which the creditor did business with “Joe’s Tires” for ten years, but in that ten years the original “Joe’s Tires, LLC” was dissolved and the customer reopened as “Joe’s Tires of Kennesaw, LLC”, often without skipping a beat and with no major difference seen by customers or suppliers to the tire shop. While we can still file suit on the debt as an open account, we may lose many of the preferential legal provisions in the credit agreement, thus potentially making a lawsuit take longer and cost more money. Additionally, often the original credit agreements contain serious penalties for late payment, interest on unpaid balances, and attorney’s fees in the event the creditor hires an attorney to collect the debt by filing a lawsuit. If I have to proceed simply as an open account, these add-on charges may be lost. It is important for a credit manager to update its customer’s credit applications on a regular basis.

How to Torpedo Your Debt Collection Suit in Georgia–Mistake 2

Another common mistake we find is that the credit manager did not record and bill the debt in the proper legal name of the customer. We recommend, along with taking a credit application, that the credit manager pull up the corporate name supplied by the customer and verify the name of the company with the Secretary of State’s office. Additionally, it’s generally a good idea to see if the owners of the company have opened any new companies or similarly named companies. It’s particularly troubling to get a judgment against Joe’s Tires, LLC to find out that the business lease and assets are held by Joe’s Tires of Marietta, LLC, and that the customer applied for credit in the name of an entity with little to no assets. A simple check with the Secretary of State may prevent such a catastrophic error. A credit manager that takes steps to properly “know the customer” at the beginning of the relationship makes my job in collecting a debt much easier.

How to Torpedo Your Debt Collection Suit in Georgia–Mistake 1

Believe it or not, one of the biggest mistakes I see occurs when the employee in charge of hiring the attorney to file the commercial debt collection lawsuit in Georgia does not actually know the true legal name of the company where he/she works! You would think this is a rare issue, but it has come up more than I would like to remember. Often times companies merge or are sold, and the longtime employee continues to call the company by its “old” or “former” name. A lawsuit should be brought in the name of the proper company, and, ideally, not in a trade name for the company. A good credit manager will provide the attorney with a copy of the company’s current registration with the Secretary of State at the time the case is placed for collection.

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.

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.

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 §9-2-25(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

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.

What is a Contract Under Seal?

Have you ever signed a contract that says SEAL after your name on the signature line and not known what that meant? Under Georgia law, a contract under seal has a 20 year statute of limitations (the time that the other side has to file a lawsuit against you under the law). [See O.C.G.A. §9-3-23]. In other states, the time periods may be longer or shorter, but in general you have a longer statute of limitations for a contract signed under seal than a contract that is not under seal. This means if you default on a loan under seal, the creditor would have 20 years to sue you on the debt! Consider a “regular” contract is limited by a six year statute of limitations. It’s really a wonder why every contract doesn’t attempt to include the appropriate language to be a contract “under seal”!

Let’s examine what makes a contract a contract under seal. Generally, the word “seal” has to be in the body of the document, or the end of the signature line must include “(SEAL)” or “(L.S.)”. In most contracts where the writing is included in the body of the document, we usually see language such as “singed under hand and seal” in one of the last few lines of the contract, usually just above the signature line, though it may be possible to include the language elsewhere in the contract. As stated, when on the signature line it must say SEAL or LS at the end of the signature line. Only recently did I learn of the “L.S.” designation myself, which may make it a more powerful way to place a document under seal, as it does not use the word “seal” and thus someone with a basic knowledge of contracts may not realize they have signed the contract under seal.

Some good general advice that ties in well with this subject is if you are presented a contract and do not understand the meaning of some word, letters, or phrase, either get proper legal advice, or cross out the confusing language and see if the other side will still accept the contract without the language in the contract.

What is the bottom line? While a creditor only has six years to sue on a contract in Georgia, if the contract is under seal, this time limit is extended to twenty years.

How long do you have to sue to enforce a child support order in Georgia?

We often get calls seeking to collect past-due child support and alimony in Georgia. Those that call often wonder if they have waited too long to do anything about their problem. In 1997 the Georgia legislature added OCGA 9-12-60(d) removing the statute of limitations for enforcing child support arrears. If your order was issued AFTER July 1, 1997, you can stop reading now, your order is still valid.

IF your order granting a child support judgment was issued on or before July 1, 1997, however, your ability to enforce the order is determined by the “old” rules for determining Statute of Limitations and the life of a judgment (the new law is given prospective effect). In such a case originating in Georgia, Georgia law requires that the original judgment be revived by the issuance of a nulla bona every seven (7) years. Georgia allows for a dormant judgment to be renewed between three years of becoming dormant through a petition for Scire Facias. See Brown v. Brown. If neither of these steps were done in a timely basis, your ability to collect may be lost. If a portion of the child support due on the order was for monies due after July 1, 1997, that portion of the judgment may still be collectable.

To further complicate the issue, if the original judgment was issued before July 1, 1997, but in a State other than Georgia, the statute of limitations for either Georgia OR the original state would apply, whichever is longer. See Sussman v. Sussman. In the Sussman case, the court applied Massachusetts law, where the statute of limitations to enforce the judgment was 20 years, and held Sussman liable.

Evictions in Georgia–The Basics

This article is intended as a general overview of the eviction process in Georgia, and does not cover every possible angle or problem in order to keep the article at a reasonable length and easy to understand. In Georgia we typically bring separate actions for eviction and future rental losses (rent deficiencies). The first step in an eviction in Georgia is to make a demand for possession of the property from the tenant. Provided the tenant does not voluntarily leave or pay in full, the next step is to file an action for dispossessory. You may ask for rent through the date the Judge signs the eviction order, but not for any future losses. The sheriff will then serve the dispossessory action. If the tenant can be served, the sheriff will personally serve the tenant, otherwise the sheriff will “tack and mail” the eviction papers—that is, the sheriff will tape one copy to the door of the building, and mail another copy in the mail. If the sheriff serves the papers by tack and mail, your only remedy will be that of dispossessing the tenant, with the exception of when the tenant files an answer, in which case the tenant is considered to have entered an appearance, and the court may award a monetary judgment against the tenant. If the tenant is not personally served nor appears and files a response, no monetary judgment may be awarded by the Court that is hearing the dispossessory matter.
There are three basis for a dispossessory in Georgia: a) Holding over beyond the rental term, b) failure to pay rent when due, or c) the owner desires possession from a tenant at will or tenant at sufferance. The most common basis is the failure to pay; for any other reason, please call to discuss your case further.
Once the tenant is served, the tenant has 7 days to file an answer (NOT 7 business days). If the 7th day falls on a Saturday, Sunday, or legal holiday, the last date for answer is the next day which is not a Saturday, Sunday, or legal holiday. If there is no answer, the landlord is entitled to a writ of possession at that time. The tenant is not required to pay rent in order to file an answer, but if the tenant desires to remain in possession for more than two weeks of the filing of the action, the tenant is required to pay rent into the registry of the Court. Because of this rule, most courts, even those known for delay and slow action, typically hold hearings on evictions very rapidly. Should the tenant pay the landlord all past due rent, plus the costs of the dispossessory proceeding within seven days of service of the action, the tenant has an absolute defense to eviction. This rule may be contractually waived in commercial cases, so be sure to update your lease forms if you do not have such a provision in your documents. The tenant, however, may only take advantage of this defense once every 12 months.
At trial the Court will call for the parties to see who has appeared, and, if the tenant does not appear, will grant a writ of possession to the landlord. In cases where the tenants appear, the Judges usually give a speech where they tell the tenants they can stand and announce “7 days” and the Court will allow them 7 days to vacate the building without payment (at the time…this does not prevent the awarding of any judgment for rent, but would be a formal resolution of the eviction portion of the proceeding). At least half of those that appear chose “7 days”, if not more than half. Generally this is a smart move, as the court is not required to give 7 days, and if the tenant were to anger the Judge for any reason, the Judge may exact some revenge by awarding possession on the spot to the landlord. Once the “7 days” crowd clears the room, the Judge will usually ask the remaining parties to go out in the hall and discuss settlement. The landlord is under no obligation to accept late rent or less than 100% of what the landlord is due, but the landlord is required to negotiate in good faith in attempt to resolve the matter. Generally speaking if the tenant can’t at least offer some money on the spot the landlord should move forward.
At trial the landlord must prove his case—that the tenant owes rent and has failed to pay. The tenant must prove payment of the rent. Often tenants will claim the property needed repairs and thus they did not pay. While this may work “up North” or in California, it generally has little weight in Georgia. If you believe the tenant will make such claims, please contact our office for advice on this specific area.
Should the loser wish to appeal any Order, the loser has seven days to file their appeal. The tenant is required to pay rent into the registry of the Court while the matter is on appeal, otherwise a writ of possession may be entered.
The prevailing landlord is entitled to a writ of possession. If the tenant does not agree to voluntarily move from the premises quickly, the landlord’s next step is to forward the writ to the sheriff or marshal to enforce the eviction. Typically the sheriff or marshal may ask the tenant to move in order to encourage voluntary removal. The actual physical eviction is the responsibility of the landlord. The custom varies between counties, but typically the landlord will make an appointment with the sheriff to evict on a certain date and time, and make arrangement with a clean-out crew or additional friends, family, employees, or day labor to assist. The sheriff will appear to ensure the eviction is done without violence, and the landlord may, at that time, enter the premises. The persons conducting the clean out must stack all the goods remaining in the house on the street or sidewalk (provided the same does not block passage). Technically the goods stacked on the street are the property of the tenant, although you often see people scavenge the goods quickly. Generally speaking, we recommend waiting a day or two, then having anything that remains hauled off before the landlord ends up cited for the trash by the city or homeowner’s association.
In the event of a money judgment awarded in the eviction court, the landlord’s attorney would then begin the collection process. In cases where there was no monetary judgment, or where there remains future rental losses due to the eviction (particularly in commercial cases), the next step would be to bring a lawsuit for breach of contract to recover the deficiency (future losses). Please see other articles on debt collection to learn more about that process.