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What to do if the contractor has several LLC's and you don't know which, if any, have a contractor's license?

VirginiaLicenses

We filed a mechanic's lien on two properties owned by the same person. It looks like they have multiple LLC's for owning different properties and I can't figure out which, if any, have a contractor's license. If the individual has a contractor's license for any of his companies, will that be sufficient to allow a lien to be filed on one of the LLC's?

2 replies

Sep 25, 2019
There would almost never be need for a property owner to have a contractor's license in order for a different construction participant to be able to claim a valid and enforceable lien against the property. While Virginia does require both the potential lien claimant, and the parties "up-the-chain" from the lien claimant, be properly licensed in order for mechanics liens to be an applicable remedy, this stops at the property owner in almost all cases. The license requirement is for the parties actually performing the work, not for the parties who own the property. In some very rare corner cases, when a property owner owns the property under one name or company, and contracts with a separate LLC to act as the GC on the project there may be some interpretation of the licensing requirements required. However, it is unlikely that the property owner would be allowed to avoid lien liability fraudulently by contracting with a company s/he owns that is un-licensed specifically for that purpose. Provided the required notice, timing, form, and other requirements are met - and that the lien claimant is licensed as required - it is likely that a lien would be an appropriate remedy.
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Sep 25, 2019
There are a few interesting nuances to the question here about Virginia mechanics lien rights, mechanics lien technicalities, and contractor licensing requirements. Hopefully, I'm understanding the question correctly in my answer here, and can help you out. Generally speaking, Virginia lien rights are good, but require licenses Virginia has great laws in place to protect contractors, subcontractors, and suppliers who file a mechanics lien.  We wrote about that here: Virginia: Strongest Liens of them all?  However, if a contractor or subcontractor is required to be licensed to do the work they are doing, then they must have the license.  If they don't have the license they will lose their lien rights and will not be able to file a lien.  Check out construction attorney Alex Benarroche's answer to this question about filing a Virginia lien without a contractors license.  But, all of this is irrelevant for who you are filing a lien against! However, from the wording of your question, this is not about whether the person filing a lien (you!) needs a contractor license, or not.  You are inquiring about the contractor license held by some other contractor on the job, someone who you are filing a lien "against."  The short answer to your question is:  It probably doesn't matter. When talking about mechanic lien claims, it's common to say that you are filing them "against" some person. You are filing "against" the owner, or the contractor, for example.  However, in actuality, while these parties are implicated by the lien, you are really filing it "against" the property: How Do Mechanics Liens Work? 17 Ways a Lien Gets You Paid. So, when you file the claim, you need to file the claim against the right property.  That's the key requirement.  Whether the other people on the job have a license or do not have a license is really not an important consideration for you (related to the lien filing)... You should do your best to identify the parties on the job accurately With that said, the lien document itself may require you to identify certain parties. Most liens -- including Virginia liens -- require that you, for example, identify the property owner.  This is pretty straight-forward. The property owner is the person or company that owns the property according to the property records. You may also want to identify who the general contractor on the project is. That seems to be what is tripping you up here, as you are searching for the GC or "contractor" that is licensed among all the various LLCs that the contractor operates. However, your inquiry may be wrong. It is not important that you identify the LLC that is licensed.  It is important that you identify the LLC that is actually on the job.  The key requirement is that this is the actual contractor working the job.  If that contractor is not licensed, that is immaterial at this junction. Except.... It may be an issue if you worked under someone unlicensed There is a potential issue in Virginia for contractors who work for other contractors without a license. In this case, the person (you) working with someone who is unlicensed may not have lien rights. So for this purpose, you want to be making the argument that you are working for someone with a license (i.e. the LLC with the license). Note that this is a little different than identifying which company is the one who is on the job. Ideal case:  the contractor that is on the job, that hired you, is licensed. That this is a LLC that you can identify as being the one with a license. Then all is well. If that is not the case, then you have a few edge arguments.  That you were working for someone that was licensed, but for whatever reason, they were using different LLCs on the job and you didn't know it, or couldn't have known it.  So, for example, you would argue that your customer is the LLC that was licensed, even if the LLC technically on the job was another LLC.  This is getting into some convoluted arguments, though.  And hopefully, you avoid that. Hopefully you're in the ideal case.  You may want to consult with an attorney more specifically about this, especially if the dollar amount in jeopardy is meaningful.  One great Virginia attorney is Chris Hill. Finding this information can be tricky Finding this information can be tricky. If you have a contract with that party, then you'll want to use whatever entity they identified in the contract. If you don't have a contract, do your best to select the company that is doing the work (i.e. Do you have checks from an entity?  Did they file anything themselves identifying themself?  Do they list their company name on any project documents?  Etc.) If they are co-mingling funds or co-mingling resources, you may want to list multiple companies on the lien, as they are all - technically - on the job.  If not, you want to do your best. Tricky issue, and hope this answers your question. Good luck!
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