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Georgia Lien Law Update

By: Jim Busch

Recently, in a yet to be reported case, the Georgia Court of Appeals addressed several lien issues. The case in question is Mull, et al. v. Mickey’s Lumber & Supply Company, Inc.. In general terms, this case addressed the issue of strict compliance with Georgia lien statute 44-14-361. The Mull case is an excellent example of how critical it is to accurately collect and properly present information in a lien.

In the Mull case, Mickey’s Lumber & Supply Company, Inc. sold building materials to the homeowner’s general contractor. The homeowners had purchased two adjacent lots in their subdivision. The homeowners’ lots 20 and 21 were at the end of a cul-de-sac and it was determined that lot 20 could not be built upon. As a result of the status of lot 20, the construction loan and building permit were made to lot 21. The general contractor began construction, but prior to closing filed for bankruptcy protection.

Five days prior to the closing of the permanent loan, Mickey’s Lumber & Supply Company, Inc. recorded a materialmen’s lien. The lien stated as part of the property description that they had a “…lien…on the below described building and real estate on which it is erected, or built, owned by [Mulls], for satisfaction of a claim…for furnishing materials and labor for the improvement of the following described property, said materials provided at the request of Waterport Builders…4th district…land lot 148, Camelot Subdivision, unit 2, lot 20, Walton County, Georgia, and being more particularly described on a certain deed recorded in Deed Book 423, Page 144, Walton County, Georgia Records…”.

The warranty deed referred to in the above legal description referenced lot 20 and lot 21. The lien document contained no street address for the properties although each lot had a separate mailing address.

The trial court granted Mickey Lumber & Supply Company, Inc.’s Motion for Summary Judgment and held the lien description adequately gave notice notwithstanding that lot 21 rather than lot 20 was the lot location of the building against which the suppliers lien was claimed. In essence, the trial court held that the homeowners owned both lots 20 and 21, which are side by side, although the home was built on lot 21, the two lots were treated as one in their single deed and thus treated as one by the Court.

The homeowners appealed to the Georgia Court of Appeals on the grounds that the legal description in the materialmen’s lien was inadequate. The Georgia Court of Appeals held that Georgia’s lien statute O.C.G.A. 44-14-361 must be strictly construed. The court went on to hold the test of whether a legal description is inadequate or not is whether or not it makes possible the identification of the real property described. In applying this test to the Mull case, the Court of Appeals held the central issue to be whether or not the property description in question sufficiently identified the real estate against which the lien was claimed. The Court of Appeals held that any descriptive words in a lien which will lead definitely to the land therein will constitute a “key”. However, if the words aided by extrinsic evidence fail to locate and identify a certain tract of land, the legal description fails and the lien is void.

The Court of Appeals went on to indicate that the lien “…due to a unilateral mistake by the appellee, inaccurately described the property subject to the attempted lien and no adequate key can be found to remedy this fatal deficiency”. Thus, the discrepancy between the lien information indicating lot 20 and the warranty deed information indicating lots 20 and 21 was held to be indefinite as to which lot was being liened and, therefore, was an inadequate legal description.

This case illustrates the critical nature of gathering correct and complete information to be contained within a materialmen’s lien. While it is possible that the Court of Appeals could have found that the supplier substantially complied with its legal description, this is a classic example of how the smallest of errors or omission can be fatal to your lien. It is always wise to establish a credible method of gathering lien information and reviewing said data prior to filing to safeguard form errors or omissions. In the Mull case, the addition of the words “and lot 21” to the lien would have resulted in a valid lien and payment to the supplier.

Mr. Busch is an attorney specializing in commercial and construction litigation for Busch, Reed, Jones & Leeper, P.C. in Marietta, Georgia

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