By: Lindsey E. Powell, Attorney at Law
In late 2019, the Georgia Court of Appeals’ issued a decision in ALA Construction Services, LLC v. Controlled Access, Inc., 351 Ga. App. 841 (2019), holding that an executed lien waiver released not only the lien claimant’s lien and bond rights, but also the claimant’s rights to a breach of contract action. The Court of Appeals looked at the language of the mechanic’s lien statute and the statutory lien waiver language provided for therein. The statutory language expressly stated that the lien waiver and release was “binding against the claimant for all purposes” and the waiver language stated that the lien claimant was “conclusively deemed to have been paid in full the amount stated.”
The court determined that the statutory language was unambiguous and not subject to judicial construction or interpretation. Because, under GA law, a signed lien waiver effectively waives claims unless the claimant files an Affidavit of Nonpayment within a certain period after executing the waiver, the court’s decision had the potential to bar a lien claimant from any recovery for the amounts claimed, even under a common law breach of contract theory of recovery.
Luckily the General Assembly issued a quick fix with SB 315, amending the statute to clarify it should be interpreted as previously understood by construction law professionals: that a lien waiver only waives or releases lien and bond claims. The bill also gives claimants 90 days (as opposed to the previous 60) from the date of signing a lien waiver to file an Affidavit of Nonpayment and invalidate the waiver. The law, signed by Governor Kemp on August 5, 2020, will go into effect on January 1, 2021.
SB 315 also made changes to the statutory form of Interim and Final Lien Waivers. Be sure to update your lien waiver forms to conform to the revised statutory language so as not to unknowingly waive your rights.
To view the specific revisions made by SB 315, click here.