Georgia

Construction Lending State Compliance Library

State statute reference
Last updated June 21, 2024

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Georgia

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Construction Lien Law

Lien Waivers

Notices

Title Practices

Contractor Licensing

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Georgia Construction Lien Law

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.

Lien Waivers

Lien Waiver Summary

A lien waiver is not valid and enforceable unless it is a duly executed lien waiver in compliance with the statutory form. These waivers are effective on the first to occur: i) receipt of full amount stated in the waiver, ii) the claimant signs a written acknowledgment of payment in full, and or 60 days has passed (unless the claimant files a lien of claim during those 60 days). O.C.G.A. § 44-14-366.

Georgia’s lien waiver laws are interpreted as both conditional and unconditional. The waiver is conditional for a period of 90 days and after 90 days the lien waiver becomes unconditional even if payment has not been made. Claimants can stop the conversion to an unconditional waiver by filing an Affidavit of Nonpayment within the 90-day timeframe.

Lien rights can be dissolved when the Contractor completes an All Bills Paid Affidavit prior to the final draw and comply with all requirements of O.C.G.A. § 44-14-361.2(a)(2). Obtaining an All Bills Paid Affidavit will force the contractor to state any unpaid parties OR risk filing a false contractor’s affidavit stating that all parties have been paid.

Statutory Form
Required¹

Notary
Not Required²

Electronic Signature
Acceptable

¹Statutory Lien Forms
Yes, Georgia has very unique statutory lien waivers and must substantially follow the language of the forms. It’s advised that these forms not be altered as that can impact their validity.

In Georgia, there are only 2 lien waiver forms, compared to the traditional four variations.
Georgia Interim Lien Waiver for Progress Payments
Georgia Final Lien Waiver for Final Payment

While Georgia does not have versions of the form that specifically address conditional or unconditional payment status, the progress and final versions of the forms have this concept mechanically built into the form, meaning that the waivers automatically convert to unconditional waivers at the earliest of 1. within 90 days, 2. Receipt of the full amount, or 3. written acknowledgement of payment.

²Lien Waiver Notarization
No, Georgia Lien waivers are not required to be notarized, however they must be “given under hand and seal”. The concept of ‘given under hand and seal’ is not the same as a notarization. Additionally, Georgia lien waiver contains a signature line for a witness.

During this review we were not able to find specific case law in Georgia that directly addresses the requirements for a witness signing a lien waiver and its impact on validity, the general principles of contract law and the specific provisions of the Georgia lien waiver statutes provide some guidance.

Georgia Lien Waiver Statutes OCGA § 44-14-366 (Interim Waiver and Release Upon Progress Payment) and OCGA § 44-14-366.1 (Final Waiver and Release Upon Final Payment) outline the requirements for valid lien waivers in Georgia. These statutes do not explicitly mention the need for a witness signature and go so far as to state that “.. that the failure to correctly complete any of the blank spaces in the form shall not invalidate said form so long as the subject matter of said release may reasonably be determined.”.

General Principles of Contract Law provide that in Georgia contract law, a witness signature is generally not required to make a contract valid, unless explicitly stated in the contract itself or required by a specific statute. However, a witness signature can serve as evidence of the parties’ intent to be bound by the agreement and can be helpful in resolving disputes about the validity or terms of the contract.

While not legally required, having a witness sign a lien waiver is considered a best practice in the construction industry in Georgia. It provides additional assurance of the waiver’s authenticity and can deter fraudulent claims or disputes.

In the event of a dispute, a court may consider the presence or absence of a witness signature as one factor in determining the validity and enforceability of the lien waiver, along with other relevant evidence and circumstances.

Although we were not able to find a specific case law directly addressing the issue, it does not mean that one does not exist. Although it is unlikely that the absence of a witness signature would automatically invalidate a lien waiver in Georgia, as long as the other statutory requirements are met. However, having a witness sign the waiver is recommended to strengthen its validity and avoid potential disputes.

We advise consulting with a qualified attorney for legal advice on specific situations and to ensure compliance with all applicable laws and regulations.

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

We found no law that “requires” title companies to manage the draw disbursement process for construction loans.

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.

Notices

Notice of Commencement (or similar like event)

Yes. O.C.G.A. § 44-14-361.5. Not later than 15 days after the contractor physically commences work on the property, a notice of commencement shall be filed by the owner, the agent of the owner, or by the contractor with the clerk of the superior court in the county in which the project is located. A copy of the notice of commencement shall be posted on the project site. The notice must include all of the information, be delivered, and be recorded as specifically stated in § 44-14-361.5.

The Notice of Commencement provides many benefits for owners and construction lenders. In Georgia, most subcontractors and suppliers are required to send preliminary lien notices when a notice of commencement has been filed to retain their rights to file liens. In the event that a Notice of Commencement is not filed on a project the preliminary notice is not required to protect lien rights.

Now in Georgia the Notice of Commencement is not filed constantly or on a regular basis by property owners with subcontractors and suppliers not having much visibility into whether or not it’s been filed. Owners and construction lenders that follow the statutory requirement of filing a Notice of Commencement will have greater visibility into which subcontractors and suppliers are performing work on the project as well as increase the difficulty of a party to perfect their lien rights.

Note in filing a Notice of Commencement, the construction lender is a party stated on the form, however, only the owner or general contractor are required to receive preliminary notices.

Who files the Notice of Commencement?

Property owner, owner’s agent

General contractor

When must it be filed?

No later than 15 days from the commencement of work.

Is a Designee required?

Possibly

Is it required to be posted on the Job Site

Yes

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 notice 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- place risk on the contractor for filing a false affidavit should the contractor execute a contractor’s affidavit stating that all parties have been paid.

Preliminary lien notices are required for subcontractors and suppliers when a Notice of Commencement has been filed properly. A preliminary lien notices is required to be filed within 30 days after the date a party delivered any materials or provided any labor or services for which a lien may be claimed. A party filing a preliminary notice of lien rights except a contractor shall, within seven days of filing the notice, send by registered or certified mail or statutory overnight delivery a copy of the notice to the contractor on the property named in the notice or to the owner of the property. The lien claimant may rely on the building permit posted on the jobsite.

Cancellation of preliminary notice upon final payment; form of cancellation. O.C.G.A. § 44-14-362
Upon final payment after all labor, services, or materials have been furnished, a person who has filed a preliminary notice of lien rights shall either deliver a cancellation of the preliminary notice of lien rights at the time of final payment or cause the notice to be canceled of record within ten days after final payment. Any person who fails to so cancel a preliminary notice shall be liable to the owner for all actual damages, costs, and reasonable attorney’s fees incurred by the owner in having the preliminary notice canceled.

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

Georgia Construction Lending Documents Kit

Download the Georgia documents kit by filling out the form. The package includes the following:

Disclaimer: These forms are provided for informational purposes only and are not intended to be legal advice or establish an attorney-client relationship. They are posted ‘as is’ and we do not warrant that they are the most current version. Users of these forms should consult their legal counsel before using for their particular transaction.