39% of contractors say it’s business as usual during COVID-19
In a recent (August 2020) survey, of general contractors and subcontractors, nearly 40% of those questioned indicated that the pandemic of COVID-19 has not changed their business practices in any way. The pandemic affected the industry greatly through delays or even through the shutting down of a project entirely. Owners and general contractors have declared bankruptcy and the construction industry continues to struggle through these uncertain times. But many in the field have not changed their business operations, including creation and enforcement of mechanic’s liens.
The survey found an explosion of mechanic’s lien claims during COVID-19, up as much as 63% year over year. But even against this backdrop, nearly two-fifths of contractors haven’t changed a thing in how their business works. The rest undertook changes including applications for SBA lending or adjusted their own credit policies.
The construction business is reluctant to change generally, so these numbers are not wholly unexpected. However, the more a contractor can protect themselves during these times of uncertainty, the better. COVID-19 will continue to change the construction industry, and mechanic’s liens are one area where change is likely to benefit some to the detriment of others. Be aware of your rights and obligations.
New Lien Waiver Procedures in 2021 for Georgia Contractors and Owners
Currently, contractors and subcontractors in Georgia wanting to preserve their rights under a breach of contract for progress payments have a “duty to speak.” Georgia has express text required to achieve these goals. All Georgia lien waiver forms must include the following: “When you execute and submit this document, you shall be conclusively deemed to have been paid the full amount stated above, even if you have not actually received such payment, 60 days after the date stated above unless you file either an affidavit of nonpayment or a claim of lien prior to the expiration of such 60 day period.”
This will change on January 1, 2021, with the implementation of Georgia’s Act 576. Here, the legislature has closed that door regarding breach of contract claims for progress payments. After the new year, the lien waiver form will only impact the claimant’s lien rights, and will not extend to breach of contract actions. The new law states “When a waiver and release provided for in the Code section is executed by the claimant, it shall be binding against the claimant for all purposes.” Georgia owners, contractors and subcontractors should all note this difference because old lien waiver forms may no longer be enforceable and may otherwise be problematic.
New Rules in Canada too – Alberta announces prompt payment legislation for construction
Georgia isn’t the only jurisdiction facing changes to mechanic’s lien law rules for 2021. Alberta, Canada has passed new legislation that would dramatically impact lien law, specifically with regards to payment timelines, lien periods and ultimately, adjudication.
Most interesting is the creation of an independent adjudication board designed to resolve disputes outside of formal litigation. This could be an asset to every owner, contractor and subcontractor in the area. Several other changes are in the law, including new rules, timelines, and amounts. If you work in the jurisdiction, you need to make yourself familiar with the specifics.
