New Georgia Law Changes Lien Waivers

Georgia Senate Bill 315 ["SB 315"] amends the lien waiver statute codified under OCGA §44-14-366. It has passed both houses and has been signed into law by the governor with an effective date of Jan. 1, 2021. The reason the law was amended was a recent decision by the Georgia Court of Appeals that held a lien waiver was not limited to lien/bond claims, but waived all claims. This meant that, where a lien waiver was filed and there was no Affidavit of Non-Payment, the supplier waived all right to collect on the account in question. The revision of the statute was made to remove that language and replace it with language limiting the effect of lien waivers and streamlining the process.

The changes under the new statute are as follows: "(a) Waivers and releases provided for under this Code section shall be limited to waivers and releases of lien and labor or material bond rights and shall not be deemed to affect any other rights or remedies of the claimant." This limitation language negated the holding by the Georgia Court of Appeals and limited lien waivers to liens and bonds only, as was meant when the statute was originally enacted.

The forms now have new titles:

"INTERIM WAIVER AND RELEASE OF LIEN AND PAYMENT BOND RIGHTS UPON INTERIM PAYMENT" and "WAIVER AND RELEASE OF LIEN AND PAYMENT BOND RIGHTS UPON FINAL PAYMENT"

SB 315 extends the time to file an Affidavit of Non-Payment. Under the present law, Affidavits of Non-Payment have to be filed in the records of the Superior Court of the County where the property was located within 60 days of the execution of the lien waiver. The new deadline is 90 days.

SB 315 negates the option to file a materialman's lien instead of an Affidavit of Non-Payment. Under present law, a materialman's lien had the same effect an Affidavit of Non-Payment. Under SB 315, there are two deadlines after a lien waiver has been filed. First, if a materialman's lien is to be filed, it must be filed within 90 days of the last date of work or delivery of materials. Second, where a lien waiver was filed the Affidavit of Non-Payment must also filed within 90 days of the date of the lien waiver.

Emory Potter, partner with Hays, Potter & Martin, LLP, is a construction, commercial and civil litigation attorney with extensive trial experience. His specialties include material man's lien practice, bond work related to construction, creditors' rights, and commercial collections.

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Tuesday, 13 April 2021

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