Materialmen Lien – The Great American Rip Off

I recently discovered the subject of a “Materialmen lien”. It is similar to a car “mechanics’ lien” and is a legal way of placing a claim against another person’s real estate for unpaid work/services performed by a contractor. It is used by general or other special contractors (remodeling, roofing, paving, plumbing, electrical, HVAC, and other services) to file claims against customers for which services and/or materials were performed/delivered, but never paid.

The “rip-off” to the service performer is two-fold:

(One) The fact that these liens have expiration periods (seriously – they do) and don’t remain in effect until paid or cancelled.

(Two) The fact that if they do expire while remaining unpaid, the damaged party may forget about the lien, may have to refile the lien, or may have to expend time and resources to file a lawsuit (that may require the services of an attorney) either in small claims court (generally for charges less than $10,000-15,000, depending on the jurisdiction) or another court to obtain a judgment that may never get paid. (Yes, some debts never get paid even if a legal judgment is awarded against a customer.)

Note: The Cobb County Magistrate Court is also referred to as small claims court. You can file a claim for which you are seeking $15,000.00 or less. If your claim exceeds $15,000.00 principal, the Magistrate Court does not have jurisdiction (the legal authority) to hear your case, and it must be filed in another court; such as, State Court or Superior Court.

I never knew a claim for unpaid services would ever expire – really?

Some liens are for hundreds of thousands of dollars. I’ve noticed many are against healthcare related facilities or operations.

Here’s what the current 2014 Official Code of Georgia (O.C.G.A.) says about these liens:


TITLE 44. PROPERTY
CHAPTER 14. MORTGAGES, CONVEYANCES TO SECURE DEBT, AND LIENS
ARTICLE 8. LIENS
PART 3. MECHANICS AND MATERIALMEN

O.C.G.A. § 44-14-361 provides for the creation of liens; property to which lien attaches; items to be included in lien

(a) The following persons shall each have a special lien on the real estate, factories, railroads, or other property for which they furnish labor, services, or materials:

(1) All mechanics of every sort who have taken no personal security for work done and material furnished in building, repairing, or improving any real estate of their employers;

(2) All contractors, all subcontractors and all materialmen furnishing material to subcontractors, and all laborers furnishing labor to subcontractors, materialmen, and persons furnishing material for the improvement of real estate;

(3) All registered architects furnishing plans, drawings, designs, or other architectural services on or with respect to any real estate;

(4) All registered foresters performing or furnishing services on or with respect to any real estate;

(5) All registered land surveyors and registered professional engineers performing or furnishing services on or with respect to any real estate;

(6) All contractors, all subcontractors and materialmen furnishing material to subcontractors, and all laborers furnishing labor for subcontractors for building factories, furnishing material for factories, or furnishing machinery for factories;

(7) All machinists and manufacturers of machinery, including corporations engaged in such business, who may furnish or put up any mill or other machinery in any county or who may repair the same;

(8) All contractors to build railroads; and

(9) All suppliers furnishing rental tools, appliances, machinery, or equipment for the improvement of real estate.

(b) Each special lien specified in subsection (a) of this Code section may attach to the real estate of the owner for which the labor, services, or materials are furnished if they are furnished at the instance of the owner, contractor, or some other person acting for the owner or contractor and shall include the value of work done and materials furnished in any easement or public right of way adjoining said real estate if the work done or materials furnished in the easement or public right of way is for the benefit of said real estate and is within the scope of the owner’s contract for improvements to said real estate.

(c) Each special lien specified in subsection (a) of this Code section shall include the amount due and owing the lien claimant under the terms of its express or implied contract, subcontract, or purchase order subject to subsection (e) of Code Section 44-14-361.1.

(d) Each special lien specified in subsection (a) of this Code section shall include interest on the principal amount due in accordance with Code Section 7-4-2 or 7-4-16.

Another source of information.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

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