You have finally found a buyer for your house. After 15 months on the market and hundreds of people walking through your house unannounced, a nice family has decided to move in. The closing is scheduled for tomorrow. The new family needs to close fast because they are moving out of their old house. You don’t care, you are just happy to have the house sold.
Then your phone rings. It is your real estate agent. She tells you that the closing has fallen through because a title search on your property revealed a mechanic’s lien from 4 years ago. When you hear the name of the lien-holder, you recognize the name as the roofer that did work on your house years ago and you paid him in full. You look in the phone book to call, but you cannot find the roofer’s company anymore. Even worse, now your potential buyer has disappeared.
Enter the Georgia law for Mechanics and Materialmen’s Liens – something every Georgia property owner needs to understand. O.C.G.A. § 44-14-361 permits mechanics, contractors, subcontractors and other workers to file a lien on your property for any work they performed on that piece of property. A Lien is an official document filed in the county courthouse deed records declaring an interest in land. The amount of a mechanic's lien can be equal to the value of the work performed plus the costs of the materials. Generally, a person cannot sell that property until the worker who filed the lien (called the "lien-holder") takes action to remove it once payment was made in full.
Here is the kicker: you as the property owner may not even find out about the lien until after the work has already long been completed. At that point, you will have the opportunity to dispute it, but the lien will already be on the books at the county courthouse as an encumbrance on your property. Generally, mechanic's liens are good tools to protect the mechanic from property owners who refuse to pay after work is completed, but in certain situations, mechanic's liens can be a nightmare for property owners.
Here is an example of how this law can be so problematic: Let’s say you hire a painting company to repaint your entire house for $3,000. Then, the painting company hires a subcontractor for $2,500 to actually do the work. The subcontractor paints the house and files a lien on the property. Only one problem, the painting company takes your $3,000, disappears and never pays the subcontractor. All of a sudden you might be in a mess of trouble. The law offers you protections, but the ordeal is still bound to leave you with a headache.
How can you help to protect yourself? A property lawyer can help provide you with a “Mechanic’s Lien Waiver Form” which when filled out and signed correctly, can prevent the mechanic, contractor or subcontractor from filing a lien on your property for a limited amount of time in exchange for pre-payment.
Remember, if you ever have any issues with any type of lien on your property, always contact a knowledgeable property lawyer in your area to help you with this complex area of the law.