2020 Lien Law Recap

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2020 lien law recap

Goodbye 2020!

We have seen a number of stories and events involving mechanic’s liens and other construction issues in 2020. Obviously, the impact of COVID-19 on the world and the industry has been the most important global situation, but other developments have truly shaped our world.  Here’s a recap:

 

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the COVID-19 Impact on Construction in vs other industries

It seems like an obvious statement now, but the global pandemic stemming from COVID-19 has changed the way all industries will work in the future, and construction is no exception.  In fact, a recent study indicated that the construction industry indicated more positive COVID tests than any other. For example, the survey found that construction workers tested positive 5.7% of the time when asymptomatic, and 10.1% with symptoms.  First responders, on the other hand, are positive merely 2.6% (asymptomatic) and 7.4% (symptoms). Without a doubt, COVID will be with us well into 2021, but more precautions can be taken for the people we work with. 

 

The Mechanics Liens Spike

During the height of the pandemic, many in the industry were concerned that mechanic’s liens would dominate projects delayed or otherwise changed due to COVID-19.  From January-March 2020, states showed an increase of 40% in mechanics lien filings across the country.  The survey also showed that many contractors have become conditioned to accepting slow payments and their negative impact on productivity as the industry norm. Most insiders agree that the industry will rebound in 2021, though the timing remains largely uncertain.

 

the 2020 Election and the construction industry

Despite the plaintiff’s whines, the election ended with Joe Biden as the president-elect and will be President on January 20, 2021.  This will impact all industries in America, especially construction.  The primary question is whether the Biden administration will go after the construction-friendly environment endorsed by the Trump administration. It appears as if Executive Orders related to the waiver of environmental regulations will not continue under the new administration. A temporary regulatory freeze is expected, but this is likely to be followed with a large-scale infrastructure bill, a potential boon to the industry. 

 

Georgia with most substantial Lien Law changes 

The state that made the most substantial changes to their lien law was Georgia, ushering in an era of unconditional payments.  Under current Georgia law, if a claimant submitted a lien waiver and did not file a claim of lien or an affidavit of nonpayment, all debts allegedly owed to the claimant were deemed paid-in-full and all claims related thereto, including breach of contract, were eliminated.  The 2021 law, taking effect on January 1, making lien waivers and releases limited to “waivers and releases of lien and labor or material bond rights and shall not be deemed to affect any other rights or remedies of the claimant.”

Looking forward to 2021 –

 

 

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