It is often true that in a bankruptcy case, creditors battle over control of the property of the debtor's estate. Creditors in certain industries have been the beneficiaries of state law in different states that have created special treatment for certain classes of creditors. Industries with the strongest lobbies are usually the beneficiaries of such special protection, and the construction industry lobby has been particularly diligent in securing such benefits for suppliers of goods and services on construction projects for the improvement of real property. The traditional form of protection is the mechanics of materialmen liens granted under state law, but the procedure for the creation and perfection of mechanics and materialmen liens varies from state to state and can be very technical. Each state sets its own requirements for the notice and recording of the lien, and failure to comply with any of these requirements may result in the loss of the lien. Georgia is a state that has created such laws, and an examination of those laws and their application suggests how effective they have been.
The Georgia mechanics and materialmen's lien statue is considered complex and can create problems for every owner or developer in the state. Under this statute, the owner's property serves as an insurance policy for the payment of all contractors, subcontractors, and material suppliers on a construction project. Assuming that the construction lien has been properly filed and prosecuted, the owner will have to pay for services or materials he or she has likely already paid for through previous payments to a now bankrupt or insolvent general contractor. In other instances, the general contractor or his subcontractors may use their lien rights as a form of leverage during temporary construction disputes. It is always vital that the owner understand fully his or her rights under the lien statute as a way of limiting exposure generally ...