Tweaked & Overhauled: The Latest on Virginia Construction Law

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Each year, Virginia’s legislature overhauls or tweaks existing legislation and occasionally enacts entirely new legislation of which construction industry operators should remain aware. This year was no exception. The following is a summary of those changes.

Mechanic's Liens
Two important changes have been made to the mechanic’s liens statutes. First, H.B. 1913 provides that any person performing labor without the appropriate class of licensure will not be entitled to the benefit of a mechanic’s lien. Relatedly, the lien forms have been updated to include licensure information in the body of the form. Second, S.B. 811 now makes it a Class 5 felony to maliciously file a false mechanic’s lien. For contractors who have been adversely affected by such liens (it happens), this should at least open the door for relatively straightforward injunctive relief, as this is a clear statement that public policy prohibits such filings.

Public Construction

Public works contractors will also see some changes. While public construction must still be performed by a licensed contractor, interested bidders no longer need a license to bid for public works. This will be helpful for those out-of-state contractors who do not wish to obtain a license in Virginia until they are certain to have work in the Commonwealth. It may also help existing contractors who plan to begin public works projects but would prefer to set up a new entity to engage in such work.

The Public Procurement Act has also received some important updates. The engineers and architects will be pleased to know that maximum costs in a single contract term of a multiple project contract have been raised in two areas. First, in airport and aviation transportation projects, the maximum cost for architectural or professional engineering services has been raised to $1,500,000.00. Additionally, the single project cost cap has been raised to $500,000.00. Second, for localities or sanitation districts with populations greater than 80,000 people, the single term cap has been raised to $2,000,000.00. These higher caps should provide a benefit for both localities and engineers/architects, as there will likely be more entrants into competitive bidding projects. Because localities can now increase volume, certain engineers/architects may be able to bid certain services lower in hopes to make up the difference in volume.

The Public Procurement Act has also been amended to allow for cashier’s check as an acceptable replacement for a bid, payment or performance bond.

Contractor’s Fund

There have also been numerous changes to the procedures for recovery against the DPOR Board for Contractors Contractor’s Fund. Unfortunately, it is somewhat of a wash as to whether homeowners who are victims of a dishonest contractor can more easily navigate the notoriously difficult process. On one hand, a claimant must now certify that reasonable efforts were taken to conduct debtor’s interrogatories and to execute against any assets revealed in the same. Now, a transcript or sworn affidavit regarding those interrogatories must be submitted with the already required paperwork. Enforcement procedures are often costly; therefore, this added layer of work will narrow the benefit of a minimal recovery. On the other hand, the judgment order no longer must include a finding of “improper or dishonest conduct,” which can be difficult to ensure is included, especially in default judgment orders. Instead, the Board has discretion to determine on its own whether a contractor’s conduct was improper or dishonest.

Each of these changes is effective July 1, 2013.