Virginia Mechanics’ Liens: What Contractors Need to Know

Welcome to the DMV Construction Law Series, where each month we examine a different set of legal issues important to contractors. Our fourth installment briefly examines certain key parts of Virginia’s Mechanic’s Lien Law that contractors should be familiar with when undertaking a project in Virginia.

A mechanics’ lien is an encumbrance on real property or a leasehold that acts as security for unpaid labor, material or construction services that is typically available to contractors and subcontractors. Our first post gave an overview on lien law in the three DMV jurisdictions, including important timing mechanisms for recording liens in DC, Maryland and Virginia. In our second and third installments, we provided a more in-depth look at mechanic’s liens in DC and Maryland, respectively. Next up is Virginia, which comes with its own set of guidelines.

Distinctive Virginia Features

As we noted previously, Virginia law requires contractors to file mechanics’ liens in the land records office of the county where the project is located either within 90 days of the last supply of labor or materials (if the project is completed), or within 90 days of the last day of the month in which the contractor last performed labor or supplied materials, if the project is ongoing.

Virginia also has a unique additional timing requirement known as the 150-Day Rule. As noted above for the lien filing deadline, a contractor must count forward from the last day it performed work or supplied materials to a project. Under the 150-Day Rule, the contractor must also count 150 days backwards from that last day of work to determine how much labor and/or materials can be included in its lien. Essentially, contractors liening a Virginia project may only lien in 150‑calendar day chunks of time. Because of this rule, contractors may need to file multiple liens on a Virginia project to capture all of the labor/material they provided to that project, and for longer duration projects they may need to begin recording liens before the project is completed. This requirement is very strictly construed – exceeding this time period, such as by filing a lien for 151 days of work, can invalidate the entire lien. Claimants should be careful in determining what day any work was performed (or materials delivered) that underlie the lien claim.

Another distinct feature of Virginia lien law is the unusual priority it gives to lien claimants. Virginia liens enjoy the highest priority of any liens in the DMV, and perhaps in the country. Once established by recording the lien, Virginia liens can have priority over (i.e., the claimant must be paid before) a construction loan held by any banks funding the project. They also survive foreclosure sales or other sales of the property. Virginia mechanics’ liens can even survive the bankruptcy of the owner. This means that mechanics’ liens have priority over deeds of trust or other such property encumbrances even if the lien was filed in the land records office after them. Perhaps because of the unusual priority given mechanics’ liens, Virginia courts tend to strictly construe most requirements in the lien statute.

Who Can Get a Lien

Virginia permits any entity in the contract chain on a construction project to file a lien. This is unlike other jurisdictions such as DC, which limits lien claimants to general contractors or their direct subcontractors or suppliers. In Virginia, any company can lien a project so long as it supplied labor or materials to the property. Thus, third-tier subcontractors, second-tier suppliers, and even architects or design professionals can lien a project if they supplied materials or performed work on site.

What Must be Included

Virginia has provided a statutory form to follow for the Memorandum of Mechanic’s Lien that must be filed in the land records office. Required information includes the name and address of the owner, the name and address of the claimant, the type of materials/services furnished to the project, the amount claimed, and a brief description and location of the property sought to be liened. The claimant also must certify the accuracy of the above information.

However, notwithstanding Virginia’s strict interpretation of many of its requirements, no inaccuracy in the lien memorandum, including the description of the property, will invalidate the lien if the claimant substantially complied with the statute. For instance, if the property can be reasonably identified by the description in the lien memorandum, and the memorandum conforms substantially to the statutory form without willfully providing false information, the lien can still be upheld. Since accurately describing the property and its owner is one of the most important aspects of the lien claim, it is recommended that prospective claimants perform a title search on the property to ensure that information is correct.

Contractors also must make sure they are licensed in Virginia before seeking to record a lien. If they are not licensed, they must certify in the lien memorandum that a Virginia license was not required for the work performed.

Owner’s Defense of Payment

Like DC, Virginia law expressly recognizes an owner’s defense of payment. That is, if an owner has paid the general contractor in full, and in good faith, a subcontractor will not be entitled to a lien on the owner’s property. Once a subcontractor or supplier serves an owner with a notice of mechanic’s lien (or even a less formal notice of amounts that have not been paid), subsequent payments by the owner to the general contractor are deemed to have been made in bad faith. Subcontractors or suppliers should serve record their lien as early as possible to avoid the owner invalidating potential lien rights.

The provisions described above are but a few of Virginia’s mechanics’ lien statute. It is important that contractors understand these lien requirements when commencing work on a project in the commonwealth. While liens can be powerful tools to help a contractor obtain payment, failure to observe the statute’s requirements can invalidate any lien rights. Contractors should consult legal counsel to make sure they are taking full advantage of Virginia’s lien statute.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Cohen Seglias Pallas Greenhall & Furman PC

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