Contractors & suppliers have strong lien rights in Virginia. If a contractor or supplier isn’t paid on an Virginia job, they can turn to filing a lien to speed up payment and protect themselves. However, there are specific requirements and rules that must be followed. Here are 6 essential things you need to know about Virginia’s mechanics lien law.
1) Most licensed parties have mechanics lien rights
In Virginia licensed parties that provide service or labor for a construction project, removal or repair or improvement on a completed project is entitled to mechanics lien (given that the total contract amount is over $50). This extends to 3rd tier suppliers (suppliers to suppliers), architects and design professionals. Note, however, that even if a party is licensed if he/she supplies labor and/or materials to an unlicensed contractor or subcontractor he/she will not have lien rights.
2) When in doubt, file early to avoid missing complicated deadlines (150-day rule)
In Virginia, it’s important to lien early. Though a mechanics lien must be filed within 90 days from the last day of the month in which the project participant provided labor and/or materials & within 90 days of the date on which the project was completed as a whole, there is an additional 150-day deadline in order to receive payment. The lien can only include the amount of service or materials supplied 150 days prior to the last day that the participant worked on a given project. If necessary, a participant can file more than one lien. Further, subcontractors are required to send a 30 day (from the last date service or materials were provided) Post Work Notice in order to hold the property owner or general contractors liable.
3) Residential projects may require preliminary notice to a mechanics lien agent
Where residential projects are concerned, a property owner might appoint a “mechanics lien agent” to handle contractor legalities. If this is the case, a project participant must provide preliminary notice to the mechanics lien agent within 30 days of last providing service or labor for a project or 30 days from the date that the building permit was issued. Labor or materials provided prior to providing preliminary notice cannot be included in the lien.
On all other projects, preliminary notice may work to make the make owner or general personally liable, but in order to be effective it must be delivered not later than 30 days after completion of entire work.
4) Only licensed parties have rights
In Virginia, mechanics lien law absolutely requires that all project participants are licensed in order to file a mechanics lien. What’s more, if a general contractor or sub-contractor supplies labor or materials to someone unlicensed, they, in turn, forfeit their right to lien as well.
5)Determining priority is complicated
Knowing who has mechanics lien priority in Virginia can be tricky.
Prior recorded deeds of trust have priority over mechanic’s liens to the extent of the value of the land, but mechanic’s liens have priority over prior recorded deeds of trust to the extent of the value of the building. Mechanic’s liens have priority over all deeds of trust recorded after the commencement of work. However, as to repair and improvement work to pre-existing structures, prior recorded deeds of trust have priority to the extent of both the land and the building.
As to competing mechanic’s liens, priority is in reverse order of tier, i.e. a sub-subcontractor’s mechanics lien has priority over a subcontractor’s mechanic’s lien, and a subcontractor’s lien has priority over a general contractor’s.
6) Using Virginia’s statutory mechanics lien forms helps avoid lien issues
Virginia has statutory mechanics lien forms (which were recently updated!), but they aren’t necessarily required. Still – it’s a good idea to use the statutory forms! Virginia’s lien statute literally says that the forms provided are sufficient for making a lien claim (as long as the right one is used), and when the statutory form is utilized, minor errors are less likely to cause major problems. More on that here: Virginia Mechanics Lien Claimants: Lien Errors Aren’t Always Fatal.
A Virginia Notice of Intent to Lien may be enough to push for payment without a Mechanics Lien