One of the most basic ways in which a creditor can destroy their chances of collecting on a construction lien is to include the costs of filing the lien itself in the total that is due on the project. Georgia law holds that the amount on the lien cannot exceed the contract price, and adding the lien costs into the total due will violate this provision. A lien is supposed to be for the labor services, or materials actually furnished on the particular job; legal and administrative expenses incurred in filing a lien do not count as services provided on a construction job. While you might be able to seek to recover such amounts directly from the contractor or owner in collections or in the event of litigation, you can’t collect the fees as part of any lien recovery. While there are some loopholes to this rule that may not doom your case in the event you included the lien fee in the total due, these loopholes are not cheap to use and not 100% perfect. At the end of the day, this is an avoidable error, and not including the lien fee in your total due could save you from a large headache. If you have any questions about construction liens, please contact our firm for advice specific to your particular case. All advice on this blog is general in nature and not intended as specific advice to your particular case or situation.
One common mistake we find is where the credit manager sends over a file for litigation without an updated spreadsheet or accounting showing each and every charge and payment made by the Defendant back to the point where the Defendant had a zero balance. We have seen cases where a client will allow a customer to buy $2o,000 or $50,000 worth of product every month, never paying off the previous balance in full before the next order is placed. Unraveling the payment stream can become a nightmare and is not the task best left to your attorney. If the case is an hourly case, the attorney will bill you significant time trying to decode your accounting system. If the case is a contingency case, the attorney will spend unnecessary hours on the case, and become discouraged from the paperwork. Worse, your opponent will turn the messy paperwork against you, accusing you of poor bookkeeping, claiming they have paid the bill. Even worse, the Judge is not going to spend the time it takes to decode a complex payment history, and may deny the creditor summary judgment, forcing a case to trial. In the long run, the creditor will either have to straighten out its own books or accept less money than it is owed to settle the account. Having a clean set of books increases a creditor’s chances of being paid in full, and a proper spreadsheet or summary bill increases the creditor’s chances of being paid.