Georgia

Lien Law Overview

Generally, mechanics lien statutes apply to both residential and non-residential construction. Title and investor guidelines will control requirements for both loan types.

With respect to non-residential properties, Georgia requires that in order to cancel a preliminary notice, the demand for filing of a lien can not be sent until the contractor’s contract is substantially complete or until the potential lien claimant’s contract has been terminated or the potential lien claimant has abandoned the contract (on residential property, none of those conditions apply). O.C.G.A. § 44-14-361.4.

Are title companies required by law to manage construction loan disbursements?

No

Can a mechanics lien have priority over a pre-existing mortgage in Georgia?

Yes, if the lender was aware of its existence before filing a security deed. See Georgia State Sav. Ass’n v. Wilson, 189 Ga. 21 (1939). Otherwise, a lender’s security deed has priority over a mechanics lien. Note that there is a difference between a mortgage and “security deed” in Georgia. A mechanics lien in Georgia will have priority over a mortgage. Thus, a lender should have a “security deed”. Georgia is a first in time jurisdiction.

O.C.G.A. § 44-14-361 lists who may obtain a special lien on real estate they furnish labor for (e.g., mechanics, contractors, subcontractors, engineers, foresters, architects, etc.). The lien attaches when work begins, or materials are delivered to the property. The lien is perfected when the lien claimant follows the many statutory requirements of O.C.G.A. § 44-14-361.1. The priority between perfected mechanic’s liens is first in time.

Other liens that have priority over a mechanics lien are listed in O.C.G.A. § 44-14-361.1(c) (common superpriority liens like taxes, certain landlord liens, etc.). The list includes general liens when the mechanics lienholder had actual notice of and was advised of the general lien before the work was done or materials or services furnished.

Preliminary Lien Notifications

Lien claimants have the option to provide a preliminary lien notice under O.C.G.A. § 44-14-361.3. A properly filed preliminary lien notices puts the contractor and owner on notice of the potential claim and is indexed in real estate records under the owner’s name. While the notice is not required to enforce the lien, it will force the contractor to either pay the lien claimant -or- risk filing a false contractor’s affidavit stating that all parties have been paid.

Notice of Completion

No, there is no process for filing a “Notice of Completion” or any other document to signify that the project has been completed.

Title

Georgia uses ALTA title commitments that allow for the Construction Loan Update Endorsement, which is used when the lender requests endorsements as additional disbursements are made. It gives coverage up-to the new outstanding mortgage balance and shows whether any other instruments have been filed and recorded since the last title update. The endorsement also ensures the priority of the insured mortgage over instruments that are not specifically listed in the endorsement. Like title companies in other states, since the title company has a stake in the disbursements, you may find that they exercise some due diligence relating to construction draws which will vary based on the title company.

Contractor Licensing

Contractor Requirement: License required for detached 1-family and 2-family residences and 1-family townhouses 3 stories or less in height.

Subcontractor Requirement: Subs must be licensed. Some trades not required if less than $2,500.

Contractor Warranties: Builders must provide a written warranty before starting work on any job over $2.500. Must detail what is covered, duration, manufacturer warranties, and claim procedures.

Contractor License Lookup

Contractor Requirements

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