Georgia Amends Lien Statute to Cover General Conditions and Other Contract Costs

The Georgia legislature recently amended the lien statute to effectively reverse a ruling by the Georgia Court of Appeals that prevented lien claimants from recovering general conditions costs and interest.

Background: 182 Tenth, LLC v. Manhattan Constr. Co.

In the Manhattan case, a lien claimant sought to recover amounts due for work on a $36 million condominium project.  The amount of the lien included a substantial amount of general conditions costs and interest on the unpaid balance.  On appeal, the court rejected the lien claimant’s ability to recover general conditions costs and interest.  It held such amounts were not lienable costs because “they were not labor, services, or materials which actually went into and became a part of the property.”

The General Assembly Responds

In response to complaints by contractors, subcontractors, and others in the construction industry, the General Assembly amended the lien statute.  It now provides that lien amounts “shall include the amount due and owing the lien claimant under the terms of its express or implied contract, subcontract, or purchase order,” but will not exceed the contract price.  In addition, lien amounts may include interest on the principal amount due.

See HB 434.

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