Lien Waivers: What they don't release...
AUGUST 9, 2017
While a lien waiver waives the lien as to the property on which the improvements have been made, it does not release the contractor from its obligations to the lien claimant. See David Shapiro & Co. v. Timber Specialities, 141 Ga. App. 354 (1977); Hampshire Homes, Inc. v. Espinosa Construction Services, 288 Ga. App. 718 (2007).
In Hampshire Homes, Inc. v. Espinosa Construction Services, the court ordered a home builder to pay damages to a construction contractor and a concrete contractor for labor and materials provided by those contractors at the request of the home builder. The home builder appealed the ruling of the trial court, in part, because a lien waiver had been signed by the construction contractor with respect to the labor and material that were at issue in the case.
In affirming the trial court’s decision in favor of the construction and concrete contractors, the court held that because the underlying debt had not been paid, even though a lien waiver had been signed, the construction and concrete contractors still had a claim against the home builder for the underlying debt. In this regard, the Court of Appeals stated “pursuing a lien on the improved property is only one avenue available construction subcontractors to collect on unpaid invoices; pursuing and then discarding that avenue does not eliminate the second avenue of pursing the underlying debt in a direct action against the debtor.”
What does this mean in practice? It means that, as a subcontractor, if you execute a lien waiver but don’t get paid and you fail to file a timely claim of lien or affidavit of nonpayment, you may still have a claim for the amount you are owed. Don’t give up on your claim if you’ve missed the deadlines to file your claim of lien or affidavit of nonpayment. You may still have a claim directly against the entity to whom you provided the labors and/or materials.