15.1 Scope of Search

The examining attorney is not required to examine the records of the Clerk of Court of the County in which the property lies in the names of any party other than that of the record title holder of the interest being examined. Comment: While the scope of a record search need not be expanded to include the name of the general contractor, it is suggested that should the examination be for a leasehold interest, the name of the fee holder, as well as the tenant, should be searched.

15.2 Inchoate Nature of Lien Right

Mechanics, contractors, subcontractors, materialmen, laborers, architects, registered foresters, registered land surveyors, and suppliers of rental tools possess a special statutory lien upon the real estate for their effort or materials furnished to improve the real estate, but the statutory requirements for the perfection of said lien are strictly construed. The term “mechanics’ and materialmen’s lien” as used in this chapter refers to the statutory lien provided to the above named parties as set forth in O.C.G.A. Sections 4414-361 and 361.1.

15.3 Priority of Mechanics’ and Materialmen’s Liens Mechanics’ and materialmen’s liens are inferior to liens for taxes, to the general and specific liens of laborers, to the general lien of landlords for rent when a distress warrant is issued out and levied, to claims for purchase money due persons who have only given bonds for titles, and to other general liens when actual notice of the general lien of landlords and others has been communicated before the work was done or materials or services furnished. Properly perfected mechanics’ and materialmen’s liens are superior to all liens which are not enumerated in the previous sentence.

Comment: See O.C.G.A. Section 44-14-361.1(c).

15.4 Recitals of Ownership

The mere statement of ownership in a mechanics’ and materialmen’s lien does not create a cloud on title. Where such a lien is filed against someone who does not have record title to the subject property, the lien and the statement of ownership may be disregarded by a title examiner. Also, a Notice of Commencement filed by an owner or general contractor shall not constitute a cloud, lien or encumbrance upon or a defect in the title of the property described within the Notice of Commencement.

Comment: Source - Old Title Standard 13.2; O.C.G.A. Section 44-14-361.5(d).

15.5 No Release of Lien Necessary

In order for a mechanics’ and materialmen’s lien to be perfected, it must be filed within ninety (90) days after the last date upon which the lien claimant provided labor, services or materials for use in improvements to the property. This date is also referred to as the date when the lien claimant’s claim became due. Failure of a lienholder to commence an action to collect the amount of his claim within 365 days from the date his claim was filed for recording or failure of the lienholder to file the statutory notice of filing of suit to collect the claim in the county wherein the property is located renders the claim of lien unenforceable. The notice of filing suit is to be cross-indexed by the Clerk of Court. A mechanics’ or materialmen’s lien may be disregarded once it is determined that no notice of suit was filed within the period of twelve (12) months plus thirty (30) days from the date when the claim of lien was filed for recording. No release of such liens shall be required by the title examiner. The claim of lien expires and is void 395 days from the date of filing of the claim of lien if no notice of commencement of lien action is filed within that time period.

Comment: Amendments to O.C.G.A. Section 44-14-360, et. seq., effective March 30, 2009. For liens dated prior to the effective date of these amendments, see previous statutory deadlines.

15.6 Bond to Discharge Lien

A properly filed mechanics’ or materialmen’s lien, before or during the institution of foreclosure proceedings, may be discharged by filing a bond in the Office of the Clerk of the Superior Court of the county in which the lien was filed. The form and sufficiency of said statutory bond must be approved by the Clerk of the Court and upon the filing of the bond, the real estate shall be discharged from the lien. Comment: Source — O.C.G.A. Section 44-14-364(a). The examining attorney may rely upon the appearance of a property bond or cash bond as evidence of the discharge of the lien only if said bond has been recorded in the correct county and if said bond clearly shows that it has been accepted by the Clerk of Superior Court. Mere recordation of a bond without the clerk’s statutory approval appears to negate the validity of the bond. The examining attorney must always look for this approval.

15.7 Preliminary Notice of Liens

The examining attorney must inspect the deed records or the Index of Preliminary Notice of Lien Rights or such separate index as established by the Clerk of Court to ascertain the identity of potential lien claimants. Should there be a Preliminary Notice of Lien Rights filed, then the examining attorney may rely upon a cancellation form which substantially conforms to the Code.

Comment: Source — O.C.G.A. Sections 44-14-361.3, 361.4, 362(b).

15.8 Satisfaction of a Mechanics’ and Materialmen’s Lien

Mechanics’ and materialmen’s liens may be satisfied of record as follows:

1. By written order of the mechanic or materialman or its attorney upon the original lien or by separate written cancellation directing that the instrument be satisfied and that the Clerk enter it satisfied; or,

2. By Quitclaim Deed from the mechanic or materialman to the current holder of record title or the Grantee to whom title is being conveyed. Said Quitclaim Deed should set forth the specific purpose of releasing the property described therein from the specific lien.

3. In instances where no notice of action was filed with the clerk of superior court as required under O.C.G.A. Section 44-14-361.1 (a)(3) for the 14 months from the time the claim becomes due, the owner of real estate against which the claim has been filed may file with the clerk of superior court in the county where the property is located a request that the lien be marked void of record. This request must be accompanied by an affidavit from an attorney licensed to practice law in Georgia who certifies that the attorney has searched the superior court records in the county where the property is located and that the records did not reflect that a notice of action has been filed. The affidavit must also provide a statement that the superior court clerk’s office’s index is current to a date more than 12 months from the date the lien claimant’s claim became due.

Comment: The third method for cancellation of mechanics’ and materialmen’s lien is based upon O.C.G.A. Section 44-14-367 which became effective July 1, 1998. This method of cancellation requires that a copy of the owner’s request to cancel the lien be forwarded to the lien claimant by registered or certified mail to the address specified in the original filing for record of the claim of lien prior to filing the request. The lien claimant shall have 30 days from the date of the filing of the request by the owner with the clerk of the superior court to object in writing to the request on a basis that such notice of action was timely filed. The lien claimant’s objection must be sent to the owner by registered or certified mail at the time a lien claimant files the objection with the clerk of the superior court. If a lien claimant so objects, the clerk shall not mark the lien void and either party may seek relief from the superior court with a declaratory judgment action. In the event no objection is filed by the lien claimant with the clerk within 30 days after filing of the request, the clerk is directed upon subsequent request from the owner of the real estate to release any bond filed and to mark the lien void of record by writing or marking on said the lien following language: “This lien is void of record pursuant to Code Section 44-4-367 of the Official Code of Georgia Annotated.” (This section was revised effective August 18, 2005 to add Paragraph 3 and related Comment.)

15.9 Affidavits to Dissolve Mechanics’ and Materialmen’s Lien Rights

A mechanics’ and materialmen’s lien “shall be dissolved if the owner, purchaser from the owner, or lender providing construction or purchase money or any other loan secured by real estate shows that:

(A) The lien has been waived in writing by the lien claimant; or

(B) They or any of them have obtained the sworn written statement of the contractor or person other than the owner at whose instance the labor, services, or materials were furnished, or the owner when conveying title in a bona fide sale or loan transaction, that the agreed price or reasonable value of the labor, services, or materials have been paid or waived in writing by the lien claimant; and

(C) When the sworn statement was obtained or given as a part of a transaction: (i) Involving a conveyance of title in a bona fide sale; (ii) Involving a loan in which the real estate is to secure repayment of the loan; or (iii) Where final disbursement of the contract price is made by the owner to the contractor

there was not of record, at the time of the settlement of the transaction a valid preliminary notice or claim of lien which had not been previously canceled, dissolved, or expired.” (O.C.G.A., Section 44-14-361.2). This Code Section provides that the term “Person other than the owner” shall not include a subcontractor and that the term “Final Disbursement” of the contract price “means payment of the agreed price between the owner and contractor for the improvements made upon the real estate or the reasonable value of the labor, services, and materials incorporated in the improvements upon the real estate and includes payment of the balance of the contract price to an escrow agent.”

Comment: See Pindar and Pindar, Ga. Real Est. Law, Sections 26-99 and 28-72 (4th ed.).