2020 Georgia Code
Title 44 - Property
Chapter 14 - Mortgages, Conveyances to Secure Debt, and Liens
Article 8 - Liens
Part 3 - Mechanics and Materialmen
§ 44-14-364. Release of Lien on Approval of Bond; Amount; Real Property Bonds; Schedule, Affidavit, and Recordation; Superior Court Clerk Held Harmless for Good Faith Discretionary Acts in Connection With Bond Approval

1. When any person entitled under this part to claim a lien against any real estate located in this state files his or her lien in the office of the clerk of the superior court of the county in which the real estate is located, the owner of the real estate or the contractor employed to improve the property may, before or after foreclosure proceedings are instituted, discharge the lien upon the approval of a bond by the clerk of superior court. The bond shall be conditioned to pay to the holder of the lien the sum that may be found to be due the holder upon the trial of any lien action that may be filed by the lienholder to recover the amount of his or her claim within 365 days from the time the claim of lien is filed. The bond shall be in double the amount claimed under that lien and shall be either a bond with good security approved by the clerk of superior court or a cash bond, except in cases involving a lien against the owner's domicile, in which event the bond shall be in the amount claimed under the lien. An owner or contractor may be required to provide supporting data to the clerk to prove the value of domiciled property when such property serves as a bond to discharge a lien provided for in this Code section. Upon the approval by the clerk of the bond provided for in this Code section, the real estate shall be discharged from the lien. For purposes of this subsection, the term "domicile" means the established, fixed, permanent, or ordinary dwelling place of the owner.
2. Within seven days of filing the bond required by subsection (a) of this Code section and any attachments, the party filing such bond shall send a notice of filing such bond and a copy of the bond by registered or certified mail or statutory overnight delivery to the lien claimant at the address stated on the lien or, if no such address is shown for the lien claimant, to the person shown as having filed such lien on behalf of the claimant at the indicated address of such person or, if the bond is filed by a contractor, to the owner of the property, provided that whenever the lien claimant or the owner is an entity on file with the Secretary of State's Corporations Division, sending the notice of filing such bond and a copy of the bond to the company's address or the registered agent's address on file with the Secretary of State shall be deemed sufficient; provided, however, that the failure to send the notice of filing the bond and copy of the bond shall not invalidate the bond for purposes of discharge of a claim of lien under this Code section. With respect to property bonds, the clerk shall not accept any real property bond unless the real property is scheduled in an affidavit attached thereto setting forth a description of the property and indicating the record owner thereof, including any liens and encumbrances and amounts thereof, the market value, and the value of the sureties' interest therein, which affidavit shall be executed by the owner or owners of the interest; the bond and affidavit shall be recorded in the same manner and at the same cost as other deeds of real property. So long as the bond exists, it shall constitute a lien against the property described in the attached affidavit.
3. The clerk of the superior court shall have the right to rely upon the amount specified in the claim of lien in determining the sufficiency of any bond to discharge under this Code section. The failure to specify both the amount claimed due under the lien and the date said claim was due shall result in such lien not constituting notice for any purposes.
4. The clerk of the superior court shall be held harmless for good faith regarding any discretionary act in connection with approval of any bond provided for in this Code section.

(Code 1933, § 67-2004, enacted by Ga. L. 1953, Jan.-Feb. Sess., p. 544, § 1; Ga. L. 1972, p. 469, § 1; Ga. L. 1981, p. 916, § 1; Ga. L. 1983, p. 1450, § 2; Ga. L. 2008, p. 1063, § 4/SB 374; Ga. L. 2012, p. 173, § 1-37/HB 665.)

The 2008 amendment, effective March 31, 2009, in subsection (a), inserted "or her" in the first and second sentences, in the second sentence, inserted "lien" preceding "action", substituted "365 days" for "12 months", and substituted "of lien is filed" for "becomes due" at the end, and added the fifth sentence.

The 2012 amendment, effective July 1, 2012, in subsection (a), substituted "upon the approval of a bond by the clerk of superior court" for "by filing a bond in the office of that clerk" in the first sentence, in the third sentence, substituted "clerk of superior court" for "clerk of the court", and substituted "the owner's domicile" for "residential property", added the fourth sentence, substituted "approval by the clerk" for "filing" in the fifth sentence, and added the last sentence; added the subsection (b) designation; near the beginning of the first sentence of subsection (b), substituted "the bond required by subsection (a) of this Code section" for "such bond" and substituted "such bond" for "the bond"; redesignated former subsection (b) as present subsection (c); and added subsection (d).

- For survey article on construction law, see 59 Mercer L. Rev. 55 (2007). For note, "Benning Construction Co. v. Dykes Paving and Construction Co.: Georgia Supreme Court Redefines the Scope of Materialman's Lien Statutes," see 45 Mercer L. Rev. 1401 (1994).

JUDICIAL DECISIONS

Intent.

- The intent of the General Assembly was to have the bond serve as a replacement for the lien, and not to establish a new and different procedure limited to the bond. M. Shapiro & Son v. Yates Constr. Co., 140 Ga. App. 675, 231 S.E.2d 497 (1976).

The intent was to provide a procedure whereby owners could alienate their property while disputes regarding claims of liens are pending. M. Shapiro & Son v. Yates Constr. Co., 140 Ga. App. 675, 231 S.E.2d 497 (1976).

The General Assembly did not intend to deprive the owner or contractor of those defenses which would have been available to defeat foreclosure of the lien. M. Shapiro & Son v. Yates Constr. Co., 140 Ga. App. 675, 231 S.E.2d 497 (1976).

The lien-release bond provided for by O.C.G.A. § 44-14-364 serves as a replacement for the lien to which it refers, and does not authorize a new and different procedure limited to the bond or result in additional rights. North v. Waffle House, Inc., 177 Ga. App. 162, 338 S.E.2d 750 (1985).

The effect of posting a property bond pursuant to O.C.G.A. § 44-14-364 is to serve as a replacement for the lien. After such a bond is filed, it is still incumbent upon the lien claimant who brings suit against the principal and surety on the bond to prove entitlement to the underlying lien. Roberts v. Porter, Davis, Saunders & Churchill, 193 Ga. App. 898, 389 S.E.2d 361 (1989).

- Where the owner with whom the materialman has a contract posts bond, this discharges the lien so far as the owner and the property are concerned. There is no longer anything to be foreclosed on, and the plaintiff's action is from then on strictly in contract and in personam against the contractor with whom it dealt. Linco Constr. Co. v. Tri-City Concrete, Inc., 161 Ga. App. 174, 288 S.E.2d 125 (1982).

Bond stands in shoes of lien to serve as security after the lien claimant has proved entitlement to the lien. M. Shapiro & Son v. Yates Constr. Co., 140 Ga. App. 675, 231 S.E.2d 497 (1976).

- The intention was to have the bond as a security to stand in the place of the lien so that the lienor still had to show compliance with the lien law and the lienee could in an action on the bond use as defenses those which would have been available to a lien foreclosure. M. Shapiro & Son v. Yates Constr. Co., 140 Ga. App. 675, 231 S.E.2d 497 (1976).

The bonds filed with the superior court stand in place of the recorded liens as security for the claims, and in any subsequent action to collect on the bond, the defendant could present as defenses those which would be available to a foreclosure of the lien for which the bond was substituted. Hoffman Elec. Co. v. Chiyoda Int'l Corp., 203 Ga. App. 731, 417 S.E.2d 371, cert. denied, 203 Ga. App. 906, 417 S.E.2d 371 (1992).

- In an action on a bond under O.C.G.A. § 44-14-364, a surety is entitled to present any defenses which would have existed on an action on the lien. Apex Supply Co. v. Commercial Union Ins. Co., 143 Ga. App. 131, 237 S.E.2d 649 (1977).

- The principal and surety under the statutory bond is entitled to present any defenses to an action on the bond that would exist if the lien for which the bond served as a substitute were being foreclosed, whether the principal be the owner or the contractor. M. Shapiro & Son v. Yates Constr. Co., 140 Ga. App. 675, 231 S.E.2d 497 (1976).

- The discharge of a materialman's lien upon the filing of a bond does not make the owners principals and the surety on the bond liable merely because a judgment was obtained against the general contractor, absent a judgment in favor of the materialman and against the owners establishing the right to a lien. Montgomery v. Richards Bldg. Materials, Inc., 122 Ga. App. 472, 177 S.E.2d 507 (1970).

- Where there is no foreclosure of the materialman's lien, no proceeding instituted to recover on the bond given under O.C.G.A. § 44-14-364 and no other action instituted to establish the amount of damages to which the plaintiff might be entitled, a complaint filed by a materialman against the clerk of court for negligence is premature. Atlas Supply Co. v. United States Fid. & Guar. Co., 119 Ga. App. 152, 166 S.E.2d 624 (1969).

- When contractor and insurance company posted a bond to discharge supplier's liens, the bond served as a replacement for the lien and supplier's later execution of waiver and release of lien did not affect its contract claims against the bond. Benning Constr. Co. v. All-Phase Elec. Supply Co., 206 Ga. App. 279, 424 S.E.2d 830 (1992).

- Trial court properly granted summary judgment to the materialman on its action to recover on a lien release bond after an electrical subcontractor did not pay for materials supplied to it by the materialman, and despite the claim of the general contractor and the surety that the materialman did not comply with a lien statute notice requirement; the lien statute notice requirement was meant to protect prospective purchasers from unknowingly buying property encumbered by liens and did not apply to the materialman's situation because the materialman, acting as a lien claimant, was attempting to recover on a lien discharge bond that the general contractor and the surety had filed to discharge the lien against the electrical contractor. Washington Intl Ins. Co. v. Hughes Supply, Inc., 271 Ga. App. 50, 609 S.E.2d 99 (2004).

In the general contractor's action against the materials provider relating to the provider's request for payment under a payment bond, the trial court erred by declaring that the payment bond obtained and recorded by the general contractor served as substituted collateral for the construction project and in discharging the materialmen's lien filed by the provider; O.C.G.A. § 10-7-31 was silent on the issue of how or whether the bond affected materialmen's liens, and, under O.C.G.A. § 44-14-364(a), the bond did not satisfy the essential requirements of a lien release bond since the bond was obtained before the provider filed its lien claim and there was nothing indicating that the bond was issued with good security approved by the clerk. Sierra Craft, Inc. v. T. D. Farrell Constr., Inc., 282 Ga. App. 377, 638 S.E.2d 815 (2006), cert. denied, No. S07C0460, 2007 Ga. LEXIS 145 (Ga. 2007).

Cited in Stein Steel & Supply Co. v. K. & L. Enters., Inc., 97 Ga. App. 71, 102 S.E.2d 99 (1958); Pickett v. Chamblee Constr. Co., 124 Ga. App. 769, 186 S.E.2d 123 (1971); Vector Co. v. Star Enters., Inc., 131 Ga. App. 569, 206 S.E.2d 636 (1974); Houston Gen. Ins. Co. v. Stein Steel & Supply Co., 134 Ga. App. 624, 215 S.E.2d 511 (1975); Davis v. Hoover-Morris Dev. Co., 136 Ga. App. 446, 221 S.E.2d 656 (1975); Daniel & Daniel, Inc. v. Cosmopolitan Co., 137 Ga. App. 383, 224 S.E.2d 44 (1976); Logan Paving Co. v. Liles Constr. Co., 141 Ga. App. 81, 232 S.E.2d 575 (1977); Yalanzon v. Sharon Constr. Co., 141 Ga. App. 294, 233 S.E.2d 220 (1977); Riverside Place, Ltd. v. B & D Asphalt Paving, Inc., 161 Ga. App. 773, 288 S.E.2d 730 (1982); Stonepecker, Inc. v. Shepherd Constr. Co., 188 Ga. App. 513, 373 S.E.2d 295 (1988); Turner Constr. Co. v. Electrical Distribs., Inc., 202 Ga. App. 726, 415 S.E.2d 325 (1992); Kruzel v. Leeds Bldg. Prods., Inc., 266 Ga. 765, 470 S.E.2d 882 (1996); Few v. Capitol Materials Inc., 274 Ga. 784, 559 S.E.2d 429 (2002); Cent. Atlanta Tractor Sales, Inc. v. Athena Dev., LLC, 289 Ga. App. 355, 657 S.E.2d 290 (2008); Massey v. Duke Builders, Ga. , S.E.2d (Sept. 28, 2020).