Construction projects, whether a new development or renovations, are complicated affairs. There are layers of parties involved, each working under different contracts. What happens when one of these people doesn’t get paid? They might file a mechanic’s lien.
A mechanic’s lien (also called a materialman’s lien) is a way for anyone that contributed labor or materials to ensure they receive their pay. The lien goes against the property, and can be used as leverage to recover whatever money is owed. But there are a couple of key timelines everyone involved should keep in mind.
A 90-day window to file
A laborer or supplier that wants to file a lien can’t do so years after the fact. Under Georgia law, a worker or supplier must file a claim of lien in the county court within 90 days of when the labor services or materials were supplied to the work site.
The lien must have specific information in it. For example, the lien must:
- Correctly state the name of the lien claimant
- Identify the owner of the property in question
- Accurately describe that property
- Include the amount of debt
A lien that does not include this information – or states any of it incorrectly – may be invalid.
While a lien exists, the property owner may have trouble selling or refinancing the property. In certain cases they may even choose to challenge the lien.
12 months to file a lawsuit
If a worker or supplier successfully files a mechanic’s lien, it does not encumber the property forever. Rather, the party that filed the lien has just 12 months to take legal action. If they do, that means they will try to foreclose on the property in order to get the money that is owed. This can result in a court battle, and potentially requires a strong litigator to help resolve.
If the claimant doesn’t sue within that timeframe, then the lien essentially fizzles out.
What is the best course of action if you find yourself in a mechanic’s lien dispute? There is no simple answer. It depends entirely on your particular situation.