GA Code § 44-14-361.2 (2021)
2021 Georgia Code|Title 44 - Property|Chapter 14 - Mortgages, Conveyances to Secure Debt, and Liens|Article 8 - Liens|Part 3 - Mechanics and Materialmen|§ 44-14-361.2. Dissolution of Lien

  The special lien specified in subsection (a) of Code Section 44-14-361 shall be dissolved if the owner, purchaser from owner, or lender providing construction or purchase money or any other loan secured by real estate shows that:   The lien has been waived in writing by lien claimant; or     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 has been paid or waived in writing by the lien claimant; and   When the sworn written statement was obtained or given as a part of a transaction:   Involving a conveyance of title in a bona fide sale;   Involving a loan in which the real estate is to secure repayment of the loan; or   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.        As used in paragraph (2) of subsection (a) of this Code section, the term:   "Person other than the owner" shall not include a subcontractor.   "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 shall include payment of the balance of the contract price to an escrow agent.       (Code 1981, §44-14-361.2, enacted by Ga. L. 1983, p. 1450, § 1; Ga. L. 1984, p. 22, § 44.)   Code Commission notes.   - Pursuant to Code Section 28-9-5, in 1999, "has" was substituted for "have" near the end of subparagraph (a)(2)(A).   Law reviews.   - For annual survey on law of real property, see 42 Mercer L. Rev. 389 (1990). For annual survey on construction law, see 64 Mercer L. Rev. 71 (2012).   JUDICIAL DECISIONS    O.C.G.A. § 4-14-361.2 contemplates a single affidavit that the agreed price or reasonable value of all the labor, services, or materials employed in the completed project have been paid and not periodic affidavits that the agreed price or reasonable value of some of the labor, services, or materials employed to date in the ongoing project have been paid. CC & B Indus., Inc. v. Stroud, 198 Ga. App. 658, 402 S.E.2d 527, cert. denied, 198 Ga. App. 897, 402 S.E.2d 527 (1991).    After reviewing the affidavit,  the court determined that in the absence of any evidence of collusion, fraud, or actual knowledge of any irregularity by the acceptance corporation, the affidavit of debtor's principal was sufficient to dissolve the inchoate materialmans' liens. Under the circumstances, the affidavit signed by debtor's principal was valid and enforceable against two creditors; thus, the acceptance corporation's lien was entitled to first priority status. RWD Real Estate, LLC v. Nissan Motor Acceptance Corp. (In re RWD Real Estate, LLC), Bankr. (Bankr. M.D. Ga. May 24, 2010).   Sufficiency of affidavit.    - A contractor's affidavit will dissolve a lien only if the conditions in both O.C.G.A. § 44-14-361.2(a)(2)(A) and (a)(2)(B) are met. Balest v. Simmons, 201 Ga. App. 605, 411 S.E.2d 576 (1991).    Contractor's affidavit reciting that it was made for the purpose of "inducing" a lender to disburse the final construction proceeds and "inducing" homeowners to make final payment was sufficient to dissolve the lien, where it was undisputed that the lender made such a disbursement, that the homeowners paid the entire proceeds to the contractor, and that upon receiving this payment the contractor had been paid the entire sum contemplated by the construction contract. Balest v. Simmons, 201 Ga. App. 605, 411 S.E.2d 576 (1991).   Affidavit held sufficient.    - A general contractor's affidavit which states that the general contractor "has paid in full or has otherwise satisfied all obligations for all materials and equipment furnished" by the materialman is in substantial if not complete compliance with O.C.G.A. § 44-14-361.2(a)(2)(A), and the materialman's lien should be dissolved. Dixie Concrete Serv., Inc. v. Life Ins. Co., 174 Ga. App. 866, 331 S.E.2d 889 (1985).    In the absence of evidence that an owner's sale of property to the construction lender was not bona fide, the owner's affidavit served to dissolve the materialman's lien even though it contained false information; it was the written document, rather than the acts or intentions of the affiant in executing it, that operated to extinguish the lien. Shockley Plumbing Co. v. NationsBank, 229 Ga. App. 60, 493 S.E.2d 227 (1997).   Affidavit not properly sworn to or notarized.    - A contractor's affidavit regular on its face, but challenged on the ground it was not properly sworn to or notarized, is as a matter of law sufficient if there is an absence of any evidence indicating that the owner was aware of the irregularity, or allegations and proof of fraud and/or collusion. Walk Softly, Inc. v. Hyzer, 188 Ga. App. 230, 372 S.E.2d 500 (1988).   Inadequate statement of payment.    - Subcontractor's lien filed before a lender's security deed was superior to the deed pursuant to O.C.G.A. § 44-2-2(b). The general contractor's affidavit that the subcontractors had been or will be paid was insufficient to satisfy the plain language of O.C.G.A. § 44-14-361.2(a), requiring a statement that payment had been made, and did not extinguish the lien. Ga. Primary Bank v. Atlanta Paving, Inc., 309 Ga. App. 851, 711 S.E.2d 409 (2011).   Sworn written statement of contractor.    - O.C.G.A. § 44-14-361.2(a)(2)(B), which includes the language "as a part of a transaction," tacitly appears to require only that the sworn statement will be obtained or given both in conjunction with the final disbursement and within such a reasonable time thereof so as to constitute "a part of" the final disbursement transaction. Whether a sworn contractor's statement has been timely obtained or given will depend on the circumstances of each case. Star Mfg., Inc. v. Edenfield, 191 Ga. App. 665, 382 S.E.2d 706 (1989).    An unsworn statement executed by general contractor for the owners of the property was not sufficient to dissolve materialman's lien. Southern Concrete Constr. Co. v. Hall, 205 Ga. App. 516, 422 S.E.2d 663 (1992).   Waiver of lien by subcontractor.    - A subcontractor contractually waives its right to file a lien on property by agreeing that a general contractor's contract with the property owner, which contains a lien waiver, be made part of its subcontract with the general contractor. MCC Powers v. Ford Motor Co., 184 Ga. App. 487, 361 S.E.2d 716 (1987).   Subcontract lien waiver clause sufficiently expressed intent to waive.    - Where the subcontract lien waiver clause provided that "the subcontractor waives his right to file a mechanic's lien and agrees that no mechanic's lien or other claims in the nature of a lien or charge against the lands and premises . . . shall be filed or maintained by the subcontractor," the language of such a clause sufficiently expressed an intention to waive a claim of lien against the improved property that the subcontractor otherwise would have been entitled to establish and to maintain under the mechanic's lien laws. AAS Plastering Co. v. TPM Contractors, Inc., 247 Ga. 601, 277 S.E.2d 910 (1981) (decided under O.C.G.A. § 44-14-361 prior to 1983 amendment).    Waivers of lien rights must be distinguished from contractor's affidavits which in the usual course of business are sworn statements by the contractor that the contractor has paid the subcontractors the reasonable value or agreed price of work done or material furnished. Anderson v. Golden, 569 F. Supp. 122 (S.D. Ga. 1982) (decided under former O.C.G.A. § 44-14-361).    Bankruptcy court denied a motion filed by a paving company and an electric company, pursuant to Fed. R. Bankr. P. 9023 and 9024 and Fed. R. Civ. P. 59 and 60, which asked the court to alter, amend, and reconsider an order which found that a lien an acceptance corporation held on real property a Chapter 11 debtor owned was entitled under O.C.G.A. § 44-14-361.2(a) to first priority status. The paving company and the electric company were not entitled to relief under Fed. R. Civ. P. 60 because the companies had not presented evidence that the acceptance corporation engaged in misconduct, misrepresentation, or fraud, and the court refused to grant relief under Fed. R. Civ. P. 59(e) because the paving company and the electric company failed in the first hearing to recognize the significance of an affidavit executed by the debtor's owner in conjunction with a loan the debtor obtained from the acceptance corporation, which falsely stated that no work had been done on the property within 90 days of closing. RWD Real Estate, LLC v. Nissan Motor Acceptance Corp. (In re RWD Real Estate, LLC), Bankr. (Bankr. M.D. Ga. July 23, 2010).    Cited in Amafra Enters., Inc. v. All-Steel Bldgs., Inc., 169 Ga. App. 388, 313 S.E.2d 110 (1984); Wachovia Bank v. American Bldg. Consultants, Inc., 138 Bankr. 1015 (Bankr. N.D. Ga. 1992); Freeman v. Fulton Concrete Co., 204 Ga. App. 465, 419 S.E.2d 536 (1992); DeKalb County v. J & A Pipeline Co., 263 Ga. 645, 437 S.E.2d 327 (1993).