Virginia Construction Contracts Guide & FAQs

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Virginia Construction Contracts Overview

Virginia Construction Contracts Overview


  • Private Jobs
  • Public Jobs

A construction contract outlines each party’s obligations, rights, and remedies on a project. But although the language in specific contract clauses is typically negotiable, Virginia has certain rules that govern what the agreement must include — and what is prohibited.

Keep in mind that, while Virginia’s rules for construction contract terms are written into state law, the courts determine how strictly those laws should be interpreted — and those interpretations can change.

On this page, you’ll find resources, legal information, and answers to frequently asked questions about Virginia’s construction contract and payment terms requirements.

Virginia construction contract provisions

While Virginia generally allows construction parties to set the terms of their agreement, there are some laws that regulate specific types of contract provisions. Any contract clause that contradicts the law is invalid and unenforceable.

“No lien” clauses

Virginia’s approach to no-lien clauses, (i.e. contract clauses that purport to waive or diminish the party’s lien rights) are strictly prohibited by Virginia law and will be declared null and void.

Contingent payment clauses
There are two types of contingent payment clauses: pay-if-paid and pay-when-paid, both of which are enforceable under Virginia law. In order to effectively shift the risk of nonpayment to a subcontractor, the clause must clearly and unambiguously express the intent of the parties to create a condition precedent to payment. If the clause lacks such a clear and unambiguous intent, it will be deemed a pay-when-paid clause, which merely sets a reasonable time for payment.

Payment timing clauses

Virginia’s prompt payment laws do not apply to private construction projects. Therefore, the parties can agree to any payment schedule they choose.

However, on public works projects, the timing of payments is strictly regulated. The timing of payments by the public entity to the general contractor depends on the entity who awarded the contract. On State projects, payments must be made within 30 days of receipt of an invoice, while on local government projects the payment deadline is extended to 45 days. All other payments to subcontractors and suppliers must be made within 7 days of receipt of payment from the higher-tiered party. These payment deadlines cannot be modified by contract.

Retainage limits

Similar to Virginia’s prompt payment laws, there are no specific statutes governing retainage practices on private construction projects. So the amount that can be withheld and the timing of its release will be governed by the terms of the contract between the parties.

As for public works projects, retainage is capped at no more than 5% of each progress payment, until the project is complete. The amount of retainage withheld cannot be increased by under the terms of the contract or subcontract.

Virginia construction contract requirements

Virginia doesn’t have any specific, statutory requirements for construction contracts. Generally, there are always certain provisions that should be included in a contract, such as a price, schedule, the scope of work, etc.

• See: A Guide to Common Construction Contract Parts

If, however, the project involves a residential property, there are certain pieces of information that must be included in the contract pursuant to 18 VAC 50-22. This includes provisions regarding estimated start and completion dates, the total contract price, the schedule of progress payments, the contractor’s license number, and more.

Construction Contracts FAQs in Virginia

Construction contracts and payment terms are highly regulated in Virginia. It can be confusing to figure out when payments must be made, how to make them, and how to best protect your company from expensive problems. Here are some frequently asked questions that come up with construction contracts and payment terms on Virginia jobs

Virginia Construction Contracts FAQs

Can you waive lien rights by contract in Virginia?

No, the ability to waive lien rights by contract (“no-lien clauses“) in Virginia is strictly prohibited under Va. Code §43-3(c)

…a general contractor, subcontractor, lower-tier subcontractor, or material supplier may not waive or diminish his lien rights in a contract in advance of furnishing any labor, services, or materials. A provision that waives or diminishes a general contractor’s, subcontractor’s, lower-tier subcontractor’s, or material supplier’s lien rights in a contract executed prior to providing any labor, services, or materials is null and void.

Do I need a written contract to file a Virginia mechanics lien?

No, there is no specific requirement to have a written contract for lien rights in Virginia. However, it’s never a good idea to work without having a written contract.

Can a Contractor File a Lien Without a Written Contract?

How does Virginia treat pay-if-paid and pay-when-paid clauses?

There are two types of contingent payment clauses, a pay-if-paid and a pay-when-paid; both of which are enforceable in Virginia.

A pay-if-paid clause will be enforceable in Virginia if the provision clearly and unambiguously expresses the parties’ intent to create a condition precedent to payment. In Virginia, the court will consider evidence of the intent of the parties at the time the contract was executed; see: Pay When Paid Clauses: Virginia’s Unique Interpretation

Absent such clear and unambiguous intent, the clause will be deemed a pay-when-paid clause which only grants a “reasonable delay in making payment, and is not permitted to indefinitely withhold payment.” –Galloway Corp. v. S. B. Ballard Constr. Co.

Are no-damages-for-delays clauses enforceable in Virginia?

Private projects

On private construction projects in Virginia, a no-damages-for-delay clause is generally enforceable. However, although not expressly recognized by VA courts, there are some generally accepted exceptions to the enforceability of these clauses, such as delays not contemplated by the parties, active interference, fraud or misrepresentation, or unreasonably long delays that constitute abandonment.

Public projects

No-damages-for-delay clauses on Virginia public works projects, however, are unenforceable under Va. Code §2.2-4335(A):

Any provision contained in any public construction contract that purports to waive, release, or extinguish the rights of a contractor to recover costs or damages for unreasonable delay in performing such contract, either on his behalf or on behalf of his subcontractor if and to the extent the delay is caused by acts or omissions of the public body, its agents or employees and due to causes within their control shall be void and unenforceable as against public policy.

Can you contract around Virginia’s prompt payment terms?

Private projects

Virginia’s prompt payment laws do not regulate payments on private construction projects. The agreement between the parties will dictate when payment is to be made, and any interest penalties for late payment.

Public projects

On public works project in Virginia, payments to general contractors on state projects must be made within 30 days of receipt of invoice or services, and on local gov’t projects, within 45 days of receipt of invoice or services. On both types of projects, the timing may be modified by the contract between the parties.

All other payments to subs and suppliers must be made within 7 days of receipt of payment by the higher-tiered party. This timing cannot be modified by contract.

• See: Virginia Public Prompt Pay Act | Payment Help for VA Contractors

Can you contract around Virginia's retainage requirements?

Private projects

Virginia does not regulate the withholding of retainage on private projects. Thus, the amount that can be withheld will be governed by the terms of the contract between the parties.

Public projects

On public works projects in Virginia, the amount of retainage that can be withheld is capped at no more than 5% of each progress payment. This amount cannot be increased under the contract or subcontract.

Does Virginia have any specific requirements for construction contracts?

Generally, there is nothing specifically required to be included in a construction contract in Virginia. However, residential construction contracts must include the following information under 18 VAC 50-22-260(B)(9):

• When work is to begin and the estimated completion date;

• Total cost of the contract and amounts and schedule of progress payments; including any downpayment amount;

• List of specific materials and work to be performed

• A plain language “exculpatory clause concerning events beyond the control of the contractor and a statement explaining that delays caused by such events do not constitute abandonment and are not included in calculating timeframes for payment or performance;

• Statement of assurance that contractor will comply with all local requirements for building permits, inspections, and zoning;

• Disclosure of cancellation rights;

• (If contract is the result of door-to-door solicitation), a signed acknowledgment by the consumer that they were provided the Department of Professional & Occupational Regulation statement of protection;

• Contractor’s name, address, license number, class of license, and classifications or specialty services;

• Statement providing that any modification to the contract, which changes the cost, materials, work to be performed, or estimated completion date, must be in writing and signed by all parties; &

• Statement notifying consumers of the VA Contractor Transaction Recovery Fund, including contract and claim information.

How long do I have to bring a breach of contract claim for nonpayment in Virginia?

The statute of limitations (deadline) to bring a breach of contract claim for nonpayment in Virginia differs, depending on whether the contract was oral or written:

• 5 years from the date of the breach of a written contract

• 3 years from the date of the breach of an oral contract

Va. Code §8.01-246

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