It is not news that the recent construction economy has not been good. Private money is not flowing into construction as it had been in the past and public projects are moving more slowly. Payment disputes leading to mechanic’s lien claims and payment bond claims are rampant because of the shaky nature of the payment stream to subcontractors and suppliers.
In considering this reality for Virginia construction professionals, I realized that I had not discussed the picky nature of Virginia mechanic’s liens in a while. Aside from time and value requirements, these liens, while powerful, are very specific and picky in their requirements. The smallest deviation from these requirements can cause a mechanic’s lien or the suit to enforce that lien to be thrown out.
Anything from a poor property description that leaves the least bit of ambiguity to failure to identify the capacity of the person signing the memorandum affidavit to incorrect apportionment of your lien to a subdivided property can (and likely will) cause a Virginia Circuit Court to throw out the lien leaving you, as a Virginia contractor, without the security and leverage that comes with a high priority lien on the owner’s property. In sum, these tricky beasts need to be handled with care.
As a quick checklist for construction contractors, here are some basic ways to avoid certain pitfalls (in no particular order of importance):
- Follow the statute and the basic requirements for a Virginia mechanic’s lien.
- Get a good title search to avoid property description and other property related issues.
- Properly account for your job payments by applying checks to the oldest invoices and work to avoid “150 day rule” issues.
- Be sure that what you’ve provided to the construction project is in fact lienable.
- Be sure to begin the lien process with plenty of time to avoid mistakes caused by time compression
Most importantly, get experienced legal counsel who deals with these finicky filings on a regular basis. Not only will this last step give you the best chance to avoid certain pitfalls, it may save you time and money through an evaluation of the costs and benefits of a lien in your particular situation.
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