Following the construction industry and related legal topics in the United States.


Tuesday, March 6, 2007

Bills before the Georgia General Assembly

This entry is the first in a two-part series summarzing current bills before the Georgia General Assembly that could potentially affect the design and construction industry. Next week I will address licensing and public works legislation.

Anti-indemnity statute. By Georgia statute, construction contracts that purport to indemnify a person from liability for damages due to bodily injury or property damage caused by that person's sole negligence are invalid and unenforceable. Currently, that statute allows an exception when the liability is covered by a policy of insurance or an insurance agreement. HB 136 eliminates those exceptions – except for liability covered by workers compensation insurance.

Owners’ right to withhold payment for lack of insurance. A bill stalled that would have eliminated that right. HB 138, if passed, would require that construction owners (before work on-site could begin) review and accept (or reject) certificates or policies of insurance submitted to them by contractors and their subcontractors (of all tiers). An owner's failure to reject a policy in writing, under HB 138, deprives the owner of the right to withhold payment for lack of insurance coverage. Observers indicate that support for the bill appears to have waned after legislators learned, from industry sources, of several practical problems with enforcement.

Mechanics' and materialmen's liens.
  • Single-family residential real estate. If enacted, SB 63 would eliminate mechanics' and materialmen's liens on "single-family residential real estate" – which is defined as all "owner occupied structure[s] for use as a dwelling for one family, including but not limited to houses, condominium units, or any combination of manufactured homes and lots." Another bill, SB 65, requires that a contractor (upon entering a contract) provide the property owner with a statutory notice of "certain parties’ lien rights[.]" SB 65 further requires that, before paying a contractor, the owner must obtain a sworn, written affidavit from the contractor stating that all of its subcontractors and materialmen have been paid. The bills states that "[f]ailure to meet [either requirement] shall invalidate any lien filed… against residential real estate" – inviting several obvious questions.
  • Dissolution of liens by admission of erroneous filing. SB 64 allows a claimant to dissolve a claim of lien by filing a sworn affidavit with the clerk of the superior court in the county where the real estate is located, stating that the lien was "filed in error."

(This entry published by David Roberts of Womble Carlyle's construction and real estate development practice group.)

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