Newsletter from Busch, Reed & Jones, P.C.

Transcription

1 [Volume 1, Issue 1] August 2014 Busch, Reed & Jones, P.C Newsletter from Busch, Reed & Jones, P.C. Greetings Founded in 2003, Busch, Reed & Jones, P.C. has established itself as a premier law firm in the construction and commercial litigation fields. The attorneys at Busch, Reed & Jones, P.C. have successfully served the metro Atlanta area, as well as the entire Southeast, for over 35 years. Many of our clients, who range from material suppliers, contractors and subcontractors to lenders, property owners and insurance companies, have remained with our firm for decades. Jeffrey S. Leeper joined the firm in 2006 as a litigation associate and has focused on general commercial litigation with particular interest in construction and corporate collections. Jeff works closely with construction companies, general contractors, subcontractors, material suppliers and developers to reduce potential liability and exposure before a problem even arises; however, should a situation demand litigation, Jeff has a proven track record and reputation of stream lining the litigation process with cost effective legal representation in both Georgia and Florida. Whether your business is large or small, when circumstances exceed your ability to control a problem, you need a successful business litigation attorney to move your Busch, Reed & Jones, P.C. welcomes claim toward a positive resolution. Don t spend unnecessary time and money attempting to muddle through the legal system on your own. Contact an attorney at new Busch, Reed & Jones, P.C. today. Williamson. Heath is a newly 3 Mistakes to Avoid When Filing Liens associate David Heath licensed attorney in Georgia as of You ve provided materials or labor to a jobsite and it s time to get paid. You mail 2013 and has a focus on corporate invoices, make phone calls, and even send s or text messages but only get the run and insurance litigation. around. You know you only have a 90- day window from the last date you provided materials or services to the property to file a lien and that deadline is rapidly approaching. Have you done everything the right way in order to have a valid and enforceable lien? This newsletter will take a look at the three most common fatal pitfalls made by lien filers before the lien is ever recorded.

2 2 Failure to Obtain a Contractor s License As of 2008, residential and general contractors are required to hold a license issued by the State Licensing Board. Georgia law specifically states that no person, whether an individual or a business organization, shall have the right to engage in the business of residential or general contracting without a current, valid residential contractor license or general contractor license. With that said, you may be wondering what a license has to do with filing a lien against property so here s the answer: Georgia law specifically states that as a matter of public policy, any contract entered into between a contractor and owner for the performance of work for which a residential or general contractor license is required, where a contractor has failed to obtain a valid current license, shall be unenforceable by the unlicensed contractor. As a result of not having an enforceable contract, no lien or bond claim can exist in favor of the unlicensed contractor for any labor, services or materials. As a result of not having an enforceable contract, no lien or bond claim can exist in favor of the unlicensed contractor for any labor, services or materials. Other Things to Remember When Filing Liens Public properties are not subject to materialman s liens. A lien claimant must substantially comply with his contract. Always retain documents confirming delivery of materials and labor. You must commence a lien action for recovery of the lien amount within 365 days of recording the lien. Owner and contractors can contest a lien and shorten the time to file a lien action to 60 days. The statutory requirements for a claim of lien may be found at O.C.G.A et. seq. For all the subcontractors and material suppliers out there whose heart just skipped a beat, relax, this only applies to contractors having a direct contract with a homeowner or property owner. Thus, the lesson to take away from this section is that if you are going to act as a residential or general contractor who contracts directly with an owner, then you better have a valid license. Otherwise, you risk your lien not being worth the paper it is printed on as of the first day you step on the jobsite. Failure to Keep Projects in Separate Accounts This particular hurdle is primarily directed at the material supplier lien filers. A material supplier furnishing material to a contractor for use in the improvement of multiple properties must identify the materials used in each particular property in separate invoices. A material supplier loses his right to file a lien where there is a failure to maintain separate accounting for properties. This issue typically arises in situations where a material supplier chooses to maintain a general account for all materials supplied to a customer and then applies payments toward a cumulative balance rather than on a per property basis. The strict nature of this rule extends further to burden the material supplier with the responsibility of inquiring as to the true owner of the property being improved by the materials and to make a reasonable effort to ascertain the source of funds received as payment from the contractor and to apply those funds to the proper account. Luckily, the harshness of the separate accounts rule has been mitigated by limiting its application only to cases where it has been shown without dispute that the contractor paid to the material supplier from the money received from the owner a sufficient amount to pay in full for all the material purchased from the material supplier that went into the owner s improvements and that the material supplier had improperly applied the money to a general account for the contractor. I have advised my material supplier clients to satisfy this requirement by creating a

3 3 master account for each customer s credit account and adding sub accounts under that master account number for each particular project or property for which materials are supplied. For example, AAA Contracting s master account may have the account number Each sub account would then be added as , and so on. The majority of the accounting software used by material suppliers will allow for this basic tracking system. In addition, technology today allows for a quick or text message to be sent to the contractor inquiring on which invoices a payment should be applied. This action will certainly satisfy the aforementioned reasonable effort requirement for material suppliers and keep you in position with a fully enforceable lien. Don t Add the Filing Fee Whether you are a material supplier, architect, surveyor, contractor or subcontractor, you have likely used a lien filing service to do the leg work associated with filing a lien. There are a handful of these companies in the metro Atlanta area and for a fee the majority will, at minimum, conduct a title search for the property, prepare, proof, and file your lien, and send the statutory notices to the owner. The average fee for these services ranges from to for standard services. I will be the first to admit that you get a lot of bang for your buck with these companies and not many attorneys could compete with this pricing, even with an extremely low hourly rate. As you may be aware, the amount of the claim and date the claim become due must be stated in the claim of lien. The problem occurs when the fee for preparing and filing the lien is added to the face value of the lien. Georgia law states that the amount of the claim cannot exceed the contract price between the owner and the lien claimant or with the contractor in the event a lien claimant is a materialman or subcontractor. In addition, a claim of lien can include charges for labor, services, or materials that have been actually furnished to the property and were furnished at the instance of the owner, contractor, or some other person acting for the owner or contractor. Situations also exist, pursuant to O.C.G.A and , where interest may also be included in the amount of the lien. However, the fees incurred by the claimant in preparing and filing the claim of lien cannot be included. Don t forget Busch, Reed & Jones, P.C. has recently upgraded its office space to a new location to better meet the needs of our growing law firm. We are now located at 639 Whitlock Avenue, Marietta, Ga Our new offices are approximately 1.5 miles west of Marietta square on Whitlock Avenue. For more specific directions to our offices, please feel free to contact us at or visit us on the web at These fees do not constitute labor or materials used in the improvement of the property and certainly do not qualify as goods and services provided at the instance of the owner or contractor. As such, the lien filing fees are not lienable items. The good news is that there is an exception to the lien statutes which allows easily separable nonlienable items to be omitted from a lien and still preserve the lien. The bad news is that the burden is on the lien claimant to show via evidence that the lien filing fee is an easily separable item which potentially requires motions, affidavits, hearings, depositions, and even appeals, all of which your attorney will be billing you an hourly rate. Long story short, I recommend that you save yourself from needlessly spending thousands in attorney s fees by simply excluding the nominal lien filing fee from your claim of lien.

4 4 Busch, Reed & Jones, P.C. 639 Whitlock Avenue Marietta, Georgia Find us on the Web: I hope you find this information helpful and are able to streamline your own business practices to make your lien filing experience both efficient and effective. I invite you to stay tuned to future installments of this newsletter for valuable recommendations and advice on our ever changing judicial system. As always, do not hesitate to contact me via telephone or with any questions or for additional information on the topics I have discussed in this newsletter. r logo here] Jeffrey S. Leeper, Esq.

5 5 O.C.G.A (a) Table of Authorities O.C.G.A (b) O.C.G.A O.C.G.A O.C.G.A et. seq. Williams v. Willingham- Tift Lumber Co., 5 Ga. App. 533, 63 S.E. 584 (1909) Atlanta Lighting Fixture Co. v. Peachtree- Sheridan Corp., 113 Ga. App. 313, 147 S.E.2d 847 Dye v. Turner Concrete, Inc., 119 Ga. App. 78, 166 S.E.2d 773 (1969) Summit- Top Dev., Inc. v. Williamson Const., Inc., 203 Ga. App. 460, 461, 416 S.E.2d 889, 890 (1992)