Affidavit of Nonpayment - Protecting Your Lien Rights under Georgia Law

By: Jared W. Heald, Esq.
Hendrick, Phillips, Salzman & Flatt, P.C. (Atlanta, GA)

There exists among suppliers a common misconception that when a waiver and release of lien rights is conditioned upon receipt of payment by the supplier that the supplier’s lien and bond rights remain intact if the supplier does not receive payment. This belief often stems from a misunderstanding of Georgia law.

Georgia law provides forms for the interim and final waiver and release of lien and bond rights titled, “Interim Waiver and Release Upon Payment” and “Waiver and Release Upon Final Payment”. Both of these forms contain the following language, “[u]pon the receipt of the sum of $ _____, the mechanic and/or materialman waives and releases any and all liens or claims of liens it has upon the foregoing described property . . . .” Identical or similar language is also utilized by Owners and General Contractors in the forms they prepare for their own use.

The catch that many unwary suppliers fall into is that, under Georgia law, executing a form with such language can, despite the language making it effective “upon receipt of payment”, effectuate a waiver and release of the supplier’s lien rights. This is because Georgia law has a special provision concerning when payment is received that deems you to have been paid, even if, in fact, you have not been paid.

Under Georgia law, payment is deemed received, and a supplier’s lien and bond rights are terminated, at the earliest of: (1) actual receipt of payment; (2) execution by the supplier of a separate written acknowledgment of payment in full; and (3) sixty days after the date of the execution of the waiver and release. The first statutory provision regarding receipt of payment is what most suppliers believe to be the common understanding of what constitutes receipt of payment. While the second statutory provision regarding receipt of payment is not commonly known by most suppliers, it is only fair that if a supplier signs an acknowledgment that payment has been received that payment be deemed received. Suppliers should simply refuse to sign such an acknowledgment unless payment has, in fact, been received. The third statutory provision regarding receipt payment, however, can impose an undue burden upon uninformed suppliers by acting to waive lien and bond rights without having received payment. Importantly, those harsh consequences can be avoided.

With regard to that portion of the law that deems you to have received payment, the complete Georgia statute provides: “Such amounts shall conclusively be deemed paid in full. . . [s]ixty days after the date of the execution of the waiver and release, unless prior to the expiration of said 60 day period the claimant files a claim of lien or files in the county in which the property is located an Affidavit of Nonpayment . . . .” Thus, the law provides an opportunity to suppliers to avoid the loss of lien rights when payment has not been received – the opportunity to file an Affidavit of Nonpayment within sixty days of the date of the execution of the waiver.

An Affidavit of Nonpayment is a signed, notarized, sworn statement which provides that the supplier has not received payment as provided for in the waiver and release, and the Georgia statutes provide a template. If it is filed in the correct county within sixty (60) days after executing the waiver, the supplier’s lien and bond rights are preserved and payment will not be deemed to have been received. The statutory form for the Affidavit of Nonpayment is found in O.C.G.A. § 44-114-366 (f)(2).

In summary, when executing a waiver and release of lien and bond rights, be sure to calendar the date at most fifty days later to provide you with enough additional time to file and record your Affidavit of Nonpayment if you have not been paid. However, it is important to note that the filing of an Affidavit of Nonpayment does not extend the time within which a supplier is required to file, for recording, a Claim of Lien.