Most, including some Atlanta contract disputes lawyers, automatically assume that a contractor has the right to file a lien on a project for failure to pay for services performed for the full value of the unpaid improvements to property. This is not necessarily the case. It is an absolute defense to a lien action in Georgia to assert the contract price for the improvements claimed. In other words, when there is a contractual agreement setting the price to be paid for services performed, a subcontractor cannot place a lien on the project for more than the agreed upon price called for in the contract. This is an important point to remember both for subcontractors looking to place a lien on a property for unpaid work and a project owner/general contractor looking to defend against a lien action. The parties are always bound by the agreement struck for services performed, good or bad.
That being said, in the case of abandonment of a contract– the subcontractor walks off the job before completing the work– the contract price agreed upon no longer sets the maximum amount of the lien. Instead, the owner can hired new contractors to finish the work abandoned by the subcontractor asserting a lien and deduct the cost of the new contractors work from what is owed under the lien. In some circumstances it could cost more than the lien amount to finish the work.
This scenario is an important one to remember as well whether you are a subcontractor who hasn’t been paid or a project owner or general contractor. If you are the sub, it may not be advisable to abandon the job just because you have not been paid on time for work already completed. You could end up getting nothing. If you are thinking about abandoning the job, it may be best to speak to a lawyer first before making a decision.
If you are the owner or general contractor, get the abandoned job completed and keep good records of what it took to get it done in defense of the lien action. This will allow you to have two potential defenses to the lien action — first, the contract price is the max owed and second, it is the contract price minus what it took to get the abandoned contracted for work completed.