Mechanics Liens in Georgian Law
The mechanics lien known in international practice means a special security that arises by operation of law directly from the performance of construction work and attaches automatically to the customer's property for the contractor's claim. Clarity is needed here: Georgian law has no such automatic lien arising by itself from construction work. What Georgian law offers are two real instruments: a mortgage over the construction land plot, and a pledge over movable things, both described by agreement and registration. This page explains precisely these two real instruments and the claims around them, so that a contractor builds the security of its fee on a legal foundation instead of an imagination.
The Mortgage over the Construction Land Plot
The first instrument is defined in Article 635 of the Civil Code: where the subject of the contract is a structure or separate parts of it, the contractor may demand for its claims arising from the contract a mortgage over the construction land plot. This means that in building a structure or performing parts of it, the contractor has the right to secure its claims with the land plot. The concept of the mortgage is defined in Article 286 of the Civil Code: an immovable thing may be used to satisfy a claim in such a way that the secured creditor is granted the right, in the first rank compared with other creditors, to satisfy its claim from the realisation of that thing or its transfer into ownership. A mortgage may also be used in connection with a future or conditional claim, provided the claim can be determined at the moment of establishment of the mortgage.
The Pledge over Movable Things
The second instrument is Article 634 of the Civil Code: to secure its claims, the contractor may use a right of pledge over the movable thing produced or repaired by it, where that thing is in the contractor's possession for the purpose of production or repair. This rule covers the part of construction work built on movable things: structures, devices and equipment which the contractor produced or repaired.
The general construction of the pledge is defined in Article 254 of the Civil Code: a movable thing of the debtor or a third person, whose transfer to others is admissible, may be used as a means of securing both monetary and non-monetary claims, so that the creditor, the pledgee, acquires the right to satisfy the claim from the realisation of the pledged property or, by agreement of the parties, from taking it into ownership, where the debtor does not perform or performs improperly. The pledgee has from the object of the pledge the right of preferential satisfaction of its claim compared with other creditors, and a pledge may also secure future or conditional claims.
The Ordinary Claim and Its Partial Recovery
Alongside the security instruments, the ordinary contractual claim also applies. Under Article 638 of the Civil Code, where the contractor terminates the obligation under the corresponding norm of the Code, it may demand the part of the remuneration corresponding to its earlier services, provided the customer has an interest in the services already rendered. This norm governs the case where the contract ends at an early stage: the claim for partial remuneration remains where the full fee has not yet accrued.
Strategy: How to Build the Security
The realistic picture is this: arranging security after the claim has arisen is late, so the instruments must be used at the stage of concluding the contract. The mortgage over the construction plot begins with a demand and is established with the participation of the landowner; the pledge over a movable thing rests on the parties' agreement and the thing being in the contractor's possession. The choice between these two paths depends on where the real subject of the claim lies: with the structure and the land, or with the movable things produced or repaired by the contractor.
Frequently Asked Questions
Below we answer the questions most frequently raised about this field.
Does a mechanics lien exist in Georgia?
An automatic lien arising by itself from construction work does not exist in Georgian law. There are two real instruments: a mortgage over the construction land plot and a pledge over movable things produced or repaired by the contractor.
When may I demand a mortgage over the construction plot?
Where the subject of the contract is a structure or its separate parts, the contractor may demand a mortgage over the construction land plot for claims arising from the contract.
Which movable things does the pledge cover?
The contractor may use a right of pledge over the movable thing it produced or repaired, where that thing is in its possession for the purpose of production or repair.
What preference does the pledgee have?
The pledgee has from the object of the pledge the right of preferential satisfaction compared with other creditors: the claim is satisfied from realisation of the pledged property or, by agreement, from taking it into ownership.
What happens on early termination of the contract?
Where the contractor terminates under the corresponding norm of the Code, it may demand the part of the remuneration corresponding to its earlier services, provided the customer has an interest in them.
How We Help on Legal.ge
Our team builds the security of contractors' claims on the real instruments of the law: we structure the demand of a mortgage over the construction plot and agree with the landowner, arrange a pledge over produced or repaired movable things, and prepare claims for partial remuneration where the contract ends early. Contact our specialists so that your construction claims are protected not by hope but by defined security.