Mechanics Liens
Have you been threatened with a Mechanics Lien? Filing bankruptcy can help, and you may even be able to strip off and completely stop the mechanics lien.
O.C.G.A. § 44-16-360 et. seq. concerns Georgia’s rules on liens. Section 361.1(2) states that the lien must be recorded within 90 days of the completion of labor:
“The filing for record of his or her claim of lien within 90 days after the completion of the work, the furnishing of the architectural services, or the furnishing or performing of such surveying or engineering services or within 90 days after the material or machinery is furnished in the office of the clerk of the superior court of the county where the property is located. The lien shall include a statement regarding its expiration pursuant to § 44-14-367 and a notice to the owner of the property on which a claim of lien is filed that such owner has the right to contest the lien; the absence of such statement or notice shall invalidate the lien.”
Section 361.1(c) further states that, after giving notice within the requisite 90-day period, the owner of the lien must file an action for the recovery of the lien within 365 days from the date of filing the record:
“The commencement of a lien action for the recovery of the amount of the party’s claim within 365 days from the date of filing for record of his or her claim of lien. In addition, within 30 days after commencing such lien action, the party claiming the lien shall file a notice with the clerk of the superior court of the county wherein the subject lien was filed.”
The filing of a bankruptcy does not effect the tolling of § 361.1. In Re Durango Paper Co., 365 B.R. 305 (Bankr. S.D. GA 2005).
In short, for a mechanic’s lien to attach, the lawsuit must be filed within 365 days of recording the lien. Failure to comply with the requirements under Georgia law extinguishes the right to collect the lien.
Mechanic’s liens are normally inferior liens. In the case of cramdowns, they are often wholly unsecured. See O.C.G.A. 44-16-361.1(c). This means is it theoretically possible to strip off, or stop, a mechanic’s lien by filing a Chapter 7 or Chapter 13 bankruptcy.
- If the mechanics lien isn’t showing up in the General Registry, and it’s been 3 months since the labor has been completed, the statutory period likely expired and the debt cannot be secured by a mechanics lien.
- Even if the mechanics lien is listed in the General Registry, it may be invalid. A lawsuit must be filed by the mechanic within 365 days of recording the lien, and notice must be made with the clerk of the corresponding Superior Court.
If you have an issue related to a mechanics lien, give us a call at 404.585.0040 for a free consultation. You can also find us on Google+.