Mechanics liens are powerful tools, and just like all powerful tools, they shouldn’t be abused. And we’ve warned against numerous times, filing a fraudulent mechanics lien is never a good idea. Generally speaking, if a mechanics lien is filed fraudulently, the lien claimant is liable for the attorneys’ fees incurred by the property owner in getting it removed, as well as any actual damages incurred as a result of the fraudulently filed lien. Virginia, however, has taken steps to further penalize the fraudulent lien claimant.
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Virginia adds criminal charges to fraudulent lien claims
Starting on July 1, 2013 it will be an even worse idea than it is currently to file a fraudulent mechanics lien in Virginia. Recently, a blog post explored a few states in which mechanics lien law can intersect with criminal law. Virginia can be added to this list.
Senate Bill 811, which changes Virginia mechanics lien law, makes it a class 5 felony to maliciously file a mechanics lien the lien claimant knows is false. This is fairly extreme. Not only is filing a false mechanics lien illegal, it’s a felony. Wow.
Filing false lien or encumbrance against another
The new law is codified under, Va. Code §18.2-213.2. The statute reads as follows:
Any person who maliciously files a lien or encumbrance in a public record against the real or personal property of another knowing that such lien or encumbrance is false is guilty of a Class 5 felony. The court in its conviction order or in a separate order, shall direct the clerk of any jurisdiction in which a false lien or encumbrance specifically described in the conviction order or separate order, including any notice or memorandum of lien. Such lien or encumbrance shall be deemed invalid and shall be treated as if it was never filed.
So, under this law, there needs to be some aspect of malicious intent. That the claimant knowingly filed a memorandum of lien that they know is baseless of false. This definitely raises the bar when it comes to penalizing unscrupulous contractors. However, there’s still the lingering issue of proving malicious intent, which may prove challenging.
Criminal penalties for fraudulent liens
Filing a fraudulent claim can not only put you on the hook for court costs and attorney fees. Now there’s some jail time involved. To drive the point how here, let’s take a look at the penalties for a class 5 felony; which can be found under Va. Code §18.2-10:
For Class 5 felonies, a term of imprisonment of not less than one year nor more than 10 years, or in the discretion of the jury or the court trying the case without a jury, confinement in jail for not more than 12 months and a fine of not more than 12 months and a fine of not more than $2,500, either or both.
Think about that. The most egregious filing of a fraudulent lien can be penalized up to 10 years! Is that worth the few thousand dollars a fraudulent claim may get you? Likely not.
Bottom line don’t file fraudulent liens
Just in case you needed more incentive to not file a fraudulent lien, besides the potential monetary liability, now there can be the specter of a felony charge hanging over your head. These penalties will definitely curb the occurrence of fraudulent lien claims being recorded.
At the end of the day, when it comes to filing liens you know are fraudulent, it’s simple. Don’t do it.