How to Avoid Invalidating Your Lien with Proper Notices

Learn Mechanic’s Lien Rights by Example

The Case: Consolidated Pipe & Supply Company v. Genoa Construction Services Inc., 690 S.E.2d 894, 302 Ga.App. 255 (Ga. App., 2010) 

The Parties:

• Owner: St. James United Methodist Church, Inc.
• General Contractor: Genoa Construction Services (“Genoa”)
• Surety for General Contractor: Westfield Insurance Company (“Westfield”)
• Subcontractor: Red-Hawk Construction, LLC (“Red-Hawk”)
• Material Supplier aka Lien Claimant: Consolidated Pipe & Supply Company (“Consolidated”)

The Mistake:

Omission of required information in the Georgia Notice to Contractor

The Consequences:

A claim amount of $109,654.22 and an unenforceable mechanic’s lien

Let’s Dive In

Red-Hawk ordered $109,654.22 worth of construction materials from Consolidated. Unfortunately, Red-Hawk filed for bankruptcy and never paid Consolidated for its materials.

Consolidated filed a mechanic’s lien on the project for the value of its materials plus interest. Westfield, as surety for Genoa, issued a payment bond for the project, as well as a mechanic’s lien release bond to discharge Consolidated’s claim of lien. Consolidated demanded payment from Genoa and Westfield. Genoa and Westfield failed to pay, so Consolidated filed suit.

Genoa and Westfield moved for summary judgment, urging that Consolidated’s Notice to Contractor failed to include certain information required under Georgia law.

Specifically, OCGA §§ 10-7-31(a) and 44-14-351.5(c), require that the Notice to Contractor set forth the name and address of each person at whose instance the materials are being furnished and the name and location of the project. Consolidated listed the debtor & project names, but did not list the debtor’s address or project location.

Consolidated claimed the omissions were immaterial because the contractor knew the location of the project and knew Red-Hawk was working on that project. The Georgia district and appellate courts, however, found the omission to be fatal to Consolidated’s mechanic’s lien. The court held the statute was clear and shall be applied according to its terms.

“…Given that the statutory provisions at issue explicitly stated that the location of the construction project and the address of the entity be set forth in the Notice to Contractor, they are matters of substance; thus, the statutory requirements to include the information may not be disregarded as mere technicalities.¹⁸ Because Consolidated’s Notice to Contractor wholly omitted the cited information, it failed to comply with either OCGA §§ 10-7-31(a) or 44-14-361.5(c)”

A mechanic’s lien must comply with the jurisdiction’s lien statutes. Each state has a very specific procedure for perfecting a mechanic’s lien, with numerous deadlines and required forms. Statutes generally set out the language that must appear in your preliminary notice, notice to contractor or notice of commencement, and the notice or claim of lien. Failing to follow the state’s statutes can result in the loss of your ability to use the remedy of a mechanic’s lien. Unfortunately for Consolidated, Georgia requires strict compliance with statutory lien laws.

Don’t lose your rights for failing to meet the state’s technical requirements.