Georgia law allows unpaid contractors, subcontractors, and suppliers to file liens against properties for which they provided services or materials. To minimize exposure to lien claims, owners should require general contractors to provide lien waivers from subcontractors and suppliers with each progress and final payment. However, Georgia's lien waiver statute mandates specific waiver forms that must be used verbatim or the waiver will not defeat a lien. Even if not paid, subcontractors and suppliers can waive lien rights by not taking action within 60 days of signing a waiver, though this requirement is often misunderstood, resulting in lost lien claims. Proper use of Georgia's lien waiver forms is important for all parties to avoid potential legal issues.

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Beware of Georgia Lien Waivers
David H. Johnson
McCorkle & Johnson, LLP
319 Tattnall Street
Savannah, Georgia 31401
(912) 232-6000
dhj@mccorklejohnson.com
Georgia law allows unpaid contractors, subcontractors, and materials suppliers to
record liens against the properties to which they supplied services or materials. These
liens were created by the legislature for three primary purposes: (1) to give the furnisher
of labor or materials a claim against property improved thereby, (2) to make that
property liable for the labor and materials, and (3) to force the owner to ensure payment
for all labor and materials prior to distribution of final payment to the contractor.
These liens attach to and provide lien claimants with interests in the property improved,
which may ultimately be foreclosed, through a complex enforcement process.
Obviously, an owner of a construction project should be anxious to keep liens from
being filed against the property.
One primary means by which an owner can minimize exposure to lien claims is
by requiring the general contractor to provide, in connection with each progress and
final payment, its own lien waiver and lien waivers from each subcontractor and major
material supplier on the job. In Georgia, the forms that must be used for lien waivers,
whether interim waivers in connection with progress payments or final waivers, are
specifically set out in the statute governing lien waivers. (Note: these waivers also serve
to extinguish bond claim rights where applicable.) In order to be valid in discharging
lien rights, waivers “shall substantially follow” the form provided by the statute,
meaning that, as a practical matter, the form should be followed verbatim. It is

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extremely common for waiver forms to be used by contractors and owners, unaware of
the statute’s mandate, which do not substantially follow the statutory forms. Under the
plain terms of the statute, these non-compliant forms will not defeat a lien.
The mandate to use the statutory forms creates a substantial burden on owners
and general contractors to ensure that proper waivers are used. The statute and the
waiver forms also dictate potentially catastrophic results for a contractor, subcontractor,
or supplier who fails to follow their dictates. A lien waiver executed in one of the forms
specified in the statute is binding upon a lien claimant and is a defense to a lien, subject
to payment in full of the amount stated in the waiver and release. Thus, the required
waivers are, at first blush, only valid if the claimant actually gets paid.
However, the statute goes on to define “payment in full” for these purposes as any
one of the following: (1) actual payment, (2) a separate written acknowledgment of
payment by the claimant, or (3) the passage of sixty days from execution of the waiver
without the recording of a lien or an affidavit of nonpayment. Therefore, even if not
actually paid, a subcontractor or supplier may waive its lien rights simply by not taking
action within sixty days of signing the waiver. Fortunately, the specified waiver forms
do contain a warning that the signer will be “conclusively deemed” paid if the sixty day
period runs with no lien or affidavit being filed. However, this warning is often
misunderstood, ignored, or overlooked, resulting in the needless loss of otherwise valid
lien claims.
Whether viewed from the perspective of an owner, contractor, subcontractor, or
supplier, there is potential danger lurking in the particular requirements of Georgia’s
lien waiver statute. Use extreme caution.