A contractor’s affidavit is a sworn statement by a contractor (defined not to include a subcontractor) or an owner, that the full contract price has been paid and that all subcontractors and material suppliers have been paid.
A contractor’s affidavit that meets the requirements of O.C.G.A. 44-14-361.2(a)(2) will dissolve a lien. The contractor’s affidavit must be obtained at the time of final disbursement of the contract price. The reason for using a contractor’s affidavit is to protect the owner from mechanics or materialman liens where the owner has paid the full contract price to the general contractor. The contractor’s affidavit can be used to protect subsequent purchasers of the improved property from mechanics or materialman liens. This is particularly important and useful in protecting subsequent purchasers where the owner acted as his or her own general contractor.
The affidavit doesn’t have to be provided before final disbursement of the contract price. But it does have to be provided as part of the transaction where the final contract price has been paid. O.C.G.A. 44 -14 -361.2 requires that the affidavit has to be given in conjunction with final disbursement of the contract price and within a reasonable time of final disbursement so as to constitute a part of the final disbursement transaction.
The contractor’s affidavit that is sufficient to dissolve a mechanics or materialmans lien is a single lien given at the time of final disbursement of the contract price. Periodic affidavits given in conjunction with payments that are not final, will not act to dissolve a mechanics or materialmans lien. A contractor’s affidavit cannot be used to dissolve a mechanics or materialman lien filed before the provision of the contractor’s affidavit.
As a subcontractor who has provided materials or labor on a project and who has not been paid, a contractor’s affidavit signifies that the contractor has been paid. This can be useful for proving payment of the contractor under the Prompt Pay Act and activates the pay when paid provision of the subcontractor’s contract with the general contractor.