Reminder: Don’t Waive Your Mechanic’s Lien Rights (or Bond Rights For That Matter)

Painted relief map of the state of Virginia.

(Photo credit: Wikipedia)

Here at Construction Law Musings, I have discussed mechanic’s liens and bond claims and how these types of payment protections interact with construction contracts. Throughout these many posts, I have emphasized both the technical and picky nature of mechanic’s liens in Virginia and the fact that the contract is king in Virginia. If you add these two concepts together, there is the risk that a subcontractor or supplier in Virginia could inadvertently waive it’s mechanic’s lien rights.

How can this happen when the mechanic’s lien is a creature of statute and not contract? The answer is easily. As a construction lawyer that represents subcontractors on a regular, if not exclusive, basis, I am seeing more and more contracts that contain unequivocal language stating that a subcontractor is either waiving its lien rights, subordinating those lien rights to any prior deeds of trust, or both. In today’s shaky construction economy, such provisions are almost becoming a standard part of most general contracts. Furthermore, such contractual provisions are enforceable in the Commonwealth of Virginia (unlike in some other states).

In short, if you needed another reason to make sure that you (and preferably your attorney) review your construction contracts, here’s another big reason.

On the other hand, your Miller and Little Miller Act payment bond rights are not as easily waived. Per these statutes, a subcontractor or supplier cannot waive it’s rights before the labor and materials are provided. However, after the labor and/or materials have been provided, these rights can be waived in writing. While this does not happen in the regular course of a construction project, I can foresee more attempts to have such waivers signed as General Contractors and other bond principals attempt to pass on more risk to those “below” them on the payment chain in reaction to the tight bid market.

What are your thoughts? Do these provisions and waivers apply in your state and are you seeing more of them? Let me know by e-mail or comment.

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11 Responses to Reminder: Don’t Waive Your Mechanic’s Lien Rights (or Bond Rights For That Matter)
  1. Mark Cobb Law Group
    Twitter:
    October 17, 2012 | 10:58 AM

    Hi Christopher,

    What a great reminder to all subcontractors and suppliers out there! I was surprised to learn that Virginia contract law allow a sub or supplier to waive their rights to file a lien. Fortunately, in Georgia, lien rights cannot be waived under the contract terms.

    Among the tricky nature of Georgia lien law, however, a sub or supplier may be requested to sign an interim lien waiver or a final lien waiver; these documents begin as conditional waivers (they are conditional upon receiving payment); after 60 days, though, they become unconditional waivers unless the sub or supplier has taken certain steps to prevent this. This has many ramifications including (i) if a sub or supplier hasn’t been paid within 60 days, they may lose all collection remedies and (ii) it shortens the period in which a sub or supplier can file a lien (or make a payment bond claim) from 90 days to 60 days.

    Very tricky stuff indeed!

    Cobb Law Group (a Georgia Law Firm for Subcontractors)
    Mark Cobb Law Group recently posted..Hello world!My Profile

  2. Christopher G. Hill
    Twitter:
    October 17, 2012 | 11:13 AM

    Thanks for your continued readership Mark. This is great insight into GA lien law, and I always appreciate your input.
    Christopher G. Hill recently posted..A Few Green Building NotesMy Profile

  3. Scott Wolfe
    Twitter:
    October 24, 2012 | 9:18 AM

    Hi Chris – Good information about the VA laws on this topic. As you know, we frequently talk about these issues on the Lien Blog. In fact, I have a tag for it: No Lien Clauses

    If you read through the articles in this tag you’ll notice that the general rule across the country is that these type of waivers are invalid as a matter of public policy. Of course, this is not the case in Virginia (an exception to the general rule).

  4. Christopher G. Hill
    Twitter:
    October 24, 2012 | 9:55 AM

    Thanks for checking in Scott. Virginia has many of these types of “quirks” because of its (what I believe to be laudable) adherence to allowing parties to control their business transactions through the contract without much court re-interpretation of the deal.
    Christopher G. Hill recently posted..Oh No! The Surety Went Belly Up! Now What?My Profile

  5. […] Reminder: Don’t Waive Your Mechanic’s Lien Rights (or Bond Rights For That Matter) Related posts: […]

  6. […] rights varies from state to state. Even under a uniform lien statute, adopted in all 50 states, contractual terms can, and should, affect the rights of the parties. Virginia allows for the waiver of lien rights by contract while other states either by court […]

  7. […] bearing on the “deal” laid out in a contract. In short, a subcontractor or supplier can waive its mechanic’s lien rights through contract. In short, if you come into Virginia to perform construction work, make sure to […]

  8. […] can make a big difference in the outcome (this is true even to the point of having a preemptive waiver of mechanic’s lien rights be enforceable). As the Indiana case shows, this strict enforcement of the contract, contrary to some popular […]

  9. […] Lien Waiver- Yes, Virginia, you can waive your lien rights by contract in my fair Commonwealth. Look for this in your […]

  10. […] Mechanic’s Lien Waiver- Yes, Virginia, you can waive your lien rights by contract in my fair Commonwealth. Look for this in your […]

  11. […] that the contract is king here in Virginia? You know how that included contractual provisions waiving mechanic’s lien rights for subcontractors and suppliers? You know how I thought that the General Assembly would not do […]

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About Musings

I am a construction lawyer in Richmond, Virginia, a LEED AP, and have been nominated by my peers to Virginia's Legal Elite in Construction Law on multiple occasions. I provide advice and assistance with mechanic's liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals.

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