06/27/2020
Georgia General Assembly Legislates Protection for Lien Claimants
I am relieved to see that the Georgia General Assembly completed passage of SB 315, which amends the Georgia mechanic’s lien statute to fix a glaring injustice caused by a recent Georgia Court of Appeals decision. In ALA Construction Services v. Controlled Access, the Court of Appeals found that the unambiguous language of the mechanic’s lien statute provided that a lien waiver is binding for “all purposes”, and this meant that the waiver barred an underlying contract claim, not just a lien or bond claim. This interpretation adversely affected claimants who signed a lien waiver, were not paid the consideration, and failed to file a claim of lien or affidavit of nonpayment within 60 days. Under the statute and waiver form, the consideration was “conclusively deemed to have been paid,” even if payment had not been made.
Legislators came to the rescue with SB 315, which amends O.C.G.A. Section 44-14-366 by providing that “Waivers and releases provided for under this Code section shall be limited to waivers and releases of lien and labor and material bond rights and shall not be deemed to affect any other rights or remedies of the claimant.” The amendment also specifies that the waiver is binding against the lien claimant not “for all purposes” as the statute previously read, but “for purposes of the waiver of lien and…bond rights”.
The Court of Appeals (and the trial court) focused on the language stating that the waiver is binding “for all purposes” and ignored the waiver language that connected the waiver to lien and bond rights only, not contract remedies. The ruling also ignored the purpose of the statute. Fortunately legislators, particularly the sponsors, Senators Tippins, Stone, Dugan, Ligon, Jr., Cowsert, Hill, and Representative Washburn, provided clarification and protection so that contract rights aren’t needlessly curtailed.