Happy New Year Blog Readers!  After a lengthy holiday break, we are now resuming our regular posts.  Forecasts for the construction industry for 2011 are mixed, but virtually everyone agrees that green building is permeating every sector of design, construction, and building operation and management.  So, here’s to a green 2011!

Over the past few years, more and more contractors are finding it necessary to file liens in an attempt to collect money for work performed on projects.  I have personally filed more liens for my clients in the past two years than in all of my prior years of practice before then.  It’s a sign of the times.

However, I recently ran into an issue that I had never before encountered.  I filed a lien for a client, who was a subcontractor on project.  He later negotiated with the prime contractor to be paid in exchange for an assignment of my client’s rights to proceed against the owner, including the lien rights.  So, I had to determine whether a Georgia lien is assignable.

I was surprised to learn that there is a very old Georgia case from 1914, Logue v. Walker, which basically held that a mechanic’s lien was assignable.  But, that Court specifically relied on a Georgia statute that is no longer in existence.  Additionally, the assignee of the liens in that case was itself a contractor that had performed work on the project.

While this case has not been reversed or otherwise overruled, there is some uncertainty as to whether the courts would interpret the current Georgia lien law, which is typically strictly construed, as permitting assignable rights in liens created under that statute.

Additionally, there is no case law at all that addresses whether a lien can be assigned to a person or company that could not file its own claim of lien on the project.  In other words—while a subcontractor may be able to assign his lien rights to the project’s general contractor, there is currently no authority that suggests the subcontractor could assign his lien to a person or company unrelated to the project, such as a bank or other creditor.

Of course, if you are the party assigning the claim of lien, you have little interest in this issue.  However, if you are considering taking an assignment of a lien or lien rights, you definitely want to understand the enforceability of those rights during your negotiations with the lien holder.

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