Major changes to the Georgian Law on the Waiver of Mechanic Liens and Payment Claims (Lien Waiver) will come into effect on January 1, 2021. Under current Georgian law, lien waiver declarations are “conditional”, ie they only waive lien and payment guarantee rights after payment of the amount specified in the lien waiver has been received. However, Georgian law assumes that the payment has been made (and the lien waiver takes effect) even if no payment has been made, unless a “non-payment affidavit” is filed within 60 days of the signing of the lien waiver . Alternatively, submitting a lien claim on time within the same 60-day period also fulfills the requirement of the affidavit of non-payment.

It is well known that the only practical effect of failing to provide a timely non-payment (or lien) affidavit was to prevent the signing party from making a pledge or payment for the one identified in the lien waiver Submit amount. In a 2019 Georgia Court of Appeals case, that understanding was changed to state that the presumption of payment applies to any claim for the amount owed, including a breach of contract against the party owing the debt.

With effect from January 1, 2021, Georgian law repeals this decision and makes other important changes. Here’s what you need to know:

  1. If you do not submit an affidavit of non-payment in due time, you are only giving up your right to assert a lien or a payment guarantee. The previous understanding of the effects of liens is restored.
  2. Submitting a lien claim on time no longer prevents the waiver of the lien from taking effect. A timely affidavit of non-payment must be submitted. Note, however, that filing the affidavit only prevents the lien waiver from taking effect. A timely lien must still be asserted or the lien must be waived.
  3. The deadline for submitting an affidavit of non-payment is extended from 60 to 90 days after signing the waiver of lien.
  4. The legal forms for lien waiver and affidavit for non-payment have changed. Click here to view copies of the updated forms.

To avoid the confusion that can arise from projects running before and after January 1st, do the following:

  1. Until January 1, 2021, continue to follow applicable law and use the applicable statutory forms for lien waivers and non-payment affidavits.
  2. Starting January 1st, 2021, use the new legal forms for all projects, including projects that started before January 1st.
  3. Starting January 1, 2021, we recommend a hybrid approach if you need to contest a lien waiver signed on the form before 2021. Submit a non-payment affidavit within 60 days instead of the new 90-day period. To do this, use the new form for the non-payment affidavit, which is valid on January 1, 2021.

We urge you to inform all employees of your company about these changes. As always, be vigilant in tracking your deadlines to protect your lien and payment rights.