Imagine you are a materialman, selling indoor carpet to the contractors. You are approached by a West Virginia developer that wants you to supply carpet and flooring for several houses in a new development. The contract represents $50,000 in new business for your company – and you hope it marks the establishment of a productive relationship with the developer. Over the course of several months, you supply the developer with carpeting and flooring, which are installed in the new construction. The developer is late on paying the first invoice and it doesn’t get any better. In fact, you never get paid for any of your product used in this construction. What do you do?
You want to act quickly. The first thing you should do is consult your attorney. West Virginia law grants you, as a materials supplier, a statutory lien for the value of your product, against the property in which the product is actually used or installed. However, this lien does not last forever and you must give notice of your lien to others who may be interested in the property in question. You have 100 days from the date you last furnished your product to record a Notice of Mechanic’s or Materialman’s Lien in the office of the clerk of the county commission in which the real estate is situated. Recording notice of your lien is necessary for its perfection and preservation. Failure to properly record notice of your lien within the required time and in accordance with the statutes will result in the lien being discharged and of no further force or effect.
At this point, you might protest – you never had a formal contract with the developer. Instead, you supplied carpet and flooring pursuant to multiple purchase orders. Does this mean you now must record a notice of lien for each purchase order? And, what if some of the carpeting and flooring at those houses was supplied more than 100 days ago? Does this mean that your lien on those properties was discharged?
The short answer is “No.” The West Virginia mechanic’s lien statutes contemplate this type of situation. All of the carpet and flooring provided for a particular house is deemed to be included in one contract – regardless of whether it was purchased or contracted for over time. Moreover, the deadline to perfect and preserve your mechanic’s lien is measured from the date that the last item is furnished – even if more than 100 days have elapsed between deliveries of carpeting and flooring. See Thorn v. Barringer et al, 73 W.Va. 618, 81 S.E. 846 (1914); see also Canton Roll & Machine Co. v. Rolling Mill Co. of America, 168 F. 465 (4th Cir. 1909) (materialman timely filed for a mechanic’s lien 60 [sic] days after last delivery where more than year had elapsed between first and last delivery). Accordingly, you can record a single notice of lien for all of the carpet and flooring supplied to a particular house – so long as you do so within 100 days of the last delivery!
But, you supplied carpeting and flooring to the developer at multiple houses. Does this mean you have to record a notice of lien for each house? Perhaps not, but you should. Under West Virginia law, a materialman who supplies materials for use in more than one building or structure (or a laborer who works on more than one building or structure) may record and give notice of only a single notice of lien, which is good as to each separate building or structure. In other words, a materialman or laborer is not required to give and record notice for each separate building or structure. Nevertheless, a notice of lien must give sufficient description of the material or labor supplied at each property by the lienholder. To avoid confusion, then, the better practice is to draft and record a notice of lien for each specific property. Although cumbersome and an additional expense, the individual filings is the better practice.
After you have recorded notice of your lien, your next step is to file suit in circuit court to enforce and preserve your lien. You have six months after filing notice of your lien with the clerk of the county commission to commence your suit. Otherwise, your lien will be discharged. Notably, you may not have to actually commence the suit yourself. Under West Virginia law, if any person having a mechanic’s lien sues to enforce the same, then that lawsuit will benefit all other persons having a lien on the property. You will, however, want to participate in such a lawsuit to preserve your lien as a judgment. You likely will want to assert any claims for breach of contract in this lawsuit, as well.
Once you have preserved your lien as a judgment, your lien is valid for a period of ten years, which may be extended indefinitely by executing on the judgment before that period expires. To do so, you must obtain an Abstract of Judgment from the Circuit Clerk’s office, which you should then record in the County Clerk’s office where the property is situated. An abstract of judgment provides constructive notice of your claim against the property and helps protect your claim. If you are aware of other property owned by the developer in other counties, you should record the abstract of judgment in those counties, as well, to create a judgment lien in your favor.
How does this seemingly confusing procedure help you recover the $50,000 you are owed for your carpeting and flooring? After all, the reason you contacted an attorney was to get paid! The answer is that a mechanic’s lien gives you an interest in the property. Accordingly, anyone who would loan the owner money and use the property as collateral or purchase the property do so subject to your lien. Such a prospective purchaser or lender may insist upon the owner obtaining a release of your lien.
Once you have established your mechanic’s lien and preserved it as a judgment, the court may then order a judicial sale of the property or so much of it as is necessary to satisfy the claims. The court may do so on its own or your lawyer may have to request the court to do so. Once you have reduced your mechanic’s lien to judgment and recorded an abstract with the county commission, your lien is valid against all of the developer’s property and not just the property to which you supplied carpet and flooring. Specifically, W.Va. Code § 38-2-35 provides that the court may give a personal decree in favor of the lienholder for the amount of its claims “against any party against whom they may be established, and such decree shall have the effect of, and be enforced as, other decrees for money.” See also W.Va. Sanitary Eng’g Corp. v. Kurish, 137 W.Va. 856, 861, 74 S.E.2d 596, 599 (1953) (W.Va Code § 38-2-35 “empowers the court having jurisdiction of a mechanic’s lien suit to enter a money decree as to any creditor, against any person liable, as to any portion of a claim not satisfied by the sale of the particular property.”). Simply, obtaining a judgment on your lien increases your chances of recovering the amount that you are owed.
What happens if you miss the 100 day deadline for perfecting and preserving your lien? The world does not end. You will continue to have a claim for breach of contract, which has much longer statutes of limitations. However, you will lose the benefit of priority created by a mechanic’s liens. A mechanic’s lien attaches “as of the date such labor, material, machinery or other necessary equipment shall have begun to be furnished.” See W.Va. Code § 38-2-16. Importantly, the West Virginia Supreme Court of Appeals has interpreted this provision to mean that “all perfected mechanics’ liens attach at the time the initial mechanic’s lien comes into existence after the construction of the building or structure begins.” Syl. Pt. 3, in part, Carolina Lumber Co. v. Cunningham, 156 W.Va. 272, 192 S.E.2d 722 (1972). In other words, even though you may have supplied carpeting and flooring to the developer relatively late in the construction process, your perfected lien would have attached when the very first work was performed on the project. And, because a mechanic’s lien has priority over any other lien—whether created by a deed of trust or otherwise—that is created after that date (or is not recorded or perfected as of that date), this can be a significant advantage. For instance, even though a judgment lien resulting from a breach of contract action will encumber the same property as the mechanic’s lien, your interest will attach from the date of judgment, at which point several other creditors might have filed ahead of you. In contrast, your priority under a mechanic’s lien is determined by the date when construction began or materials were first delivered on that property – and this priority is preserved by filing suit on your mechanic’s lien and reducing it to judgment.
Contact your attorney for further information. A mechanic’s lien is essential to establishing your claim against any property to which you have supplied material, labor or other improvements and have yet to be paid. Accordingly, you should choose an experienced construction attorney to help preserve and enforce your claims under the West Virginia mechanic’s liens statutes.