Contracts – Page 54 – Construction Law Musings- Richmond, VA

Bonds, Payment Bonds – Virginia’s “Little Miller Act”

Here at Musings, we have discussed the topic of mechanic’s liens extensively. However, a mechanic’s lien may not be appropriate depending on the type of project that you work on. For instance, in Virginia (as in most states), a contractor cannot place a mechanic’s lien on a public project.

In Virginia, the legislature has adopted the “Little Miller Act,” modeled after its federal counterpart. The Virginia Act requires that a contractor post both a payment and procurement bond on any public project valued at over $100,000.00. These bonds secure just what you would think that they would, i. e. payment of subcontractors and performance of the work. The payment bond is a substitute for the lien rights that a subcontractor would have on a private project.

Essentially, the Little Miller Act allows a subcontractor or material supplier the right to collect under the bond if it has not been paid within 90 days of the date that the last material or labor was provided to a project. Once the subcontractor or material man shows that the labor or material was in fact provided, the claim is collectible absent some proof by the bonding company or contractor that it has some sort of payment defense (setoff, delay, etc.).

In order to take advantage of this powerful tool, you need only file a claim within a year of the last date of work/material supply if you are in direct contract with the general contractor. If you are not in direct contract with the general contractor (or other party against whose bond you are claiming), you must send a notice to that party within 90 days of the last date of work.

This brief overview should give the basics of Virginia’s Little Miller Act. As always, consult with a knowledgeable attorney when making any sort of construction claim.

Update: Since the publication of this post, the Virginia General Assembly has made some changes to the Little Miller Act, including a reduction of the notice period to 90 days.

If you find this helpful, please subscribe or comment below. Also, feel free to contact me with any questions or other concerns you may have.

Upcoming Construction Related Events

I just thought I’d give a quick update on my upcoming construction related activities. I have been lucky enough to be invited to speak at various conferences and meetings of construction professionals.

On Thursday, April 22, 2010, I will be speaking on the topic of Construction Contract Pitfalls to the local chapter of the ASPE. Here’s the brochure for more details.

On June 2 and 3, 2010 I will be speaking at the 2010 Annual VOSH Occupational Safety Conference on the topic of Ethical Considerations for Safety Officials. Here are the details.

I will still be speaking (along with Scott Wolfe, Shari Shapiro and Tim Hughes) at the now rescheduled for fall Green Legal Matters conference on the topic of LEEDigation: The Impact of LEED on Construction Litigation and Practice. For more on this, click here.

I will also be authoring the Virginia Construction Law Survey for the University of Richmond Law Review. This will be published at a date to be determined. If any of you Virginia construction attorneys have any recent (post 2008) developments that you think should be included, please let me know.

I thank all of you who have offered me opportunities to publish in your publications. I will be sure to link to those articles at the appropriate time.

Thanks again to all of you who regularly read Construction Law Musings and post in the Guest Post Friday series. I truly appreciate all of your readership and efforts.

UPDATE: I have just gotten confirmation that I will be speaking at the ASSE Region VI Professional Development Conference, check out the lineup here.

UPDATE Pt. 2: The Green Legal Matters Conference has been postponed to September 2010.

As always, I welcome your comments below. Please subscribe to keep up with this and other Construction Law Musings.

Affirmed: The Contract is King in Virginia

We have discussed the overwhelming need for precision in construction contract drafting on several occasions here at Musings. This need is illustrated with great clarity by the litigation surrounding the Granby Towers in Norfolk, Virginia. The circumstances surrounding the Granby Towers debacle have been well documented. For that reason, I will not re-iterate them here. This litigation continues to swirl and involved interpretation of pay if paid clauses, financial contingency clauses (thanks @timrhughes), and a large number of other claims by contractors, subcontractors and construction material suppliers.

Now, as pointed out at the Virginia Real Estate, Land Use & Construction Law blog by my good friend Heidi Meinzer of Bean Kinney & Korman, the 4th Circuit Court of Appeals upheld the Eastern District of Virginia’s decision to enforce a pay if paid clause in the contract between Turner Construction and Universal Concrete. This decision was despite an argument that the contract between the Owner and Turner created an ambiguity. Check out the opinion here.

The lesson from these cases and this latest 4th Circuit case? The contract is king in Virginia. Even in an extreme case such as the Granby Towers mess, the Courts in Virginia will stick to the contract. While this strict adherence to the deal hurt many the players at Granby Towers, the lesson is not all negative. Frankly, I find the strict interpretation of contracts to be a good thing. Contractors and subcontractors get to essentially create a deal with the assurance that a Virginia court will not decide that it could have created a better one. You can sleep well with the certainty that the rules of the game will not change months (or years) after the project is complete.

In short, if you, as a construction professional in Virginia, carefully draft your contracts and work with a construction attorney to assure that you at least know what the parameters of the deal are, you can do very well. Don’t be scared by contracts, just be careful.

UPDATE: Here is a great analysis of Virginia and the 6th Circuit Court of Appeals by @matthewdevries at his blog.

As always, I welcome and encourage your comments below, please share your thoughts. Also, please subscribe to keep up with the latest Construction Law Musings.

Image via Wikipedia

AGC Construction Contract Pitfalls Seminar

I will be participating as one of two panelists discussing the AIA and ConsensusDOCS potential pitfalls on February 23, 2010 at the Richmond, VA headquarters for the AGC of Virginia. I encourage all general contractors and subcontractors in the Richmond, VA area to attend. Check out the flier below.

[ipaper id=25164935]

For a .pdf of this registration form, click here.

Contracts and Collections- Construction Expo- Richmond, VA

Do you have issues with collection on your construction contracts? Need to file a mechanic’s lien? If so, check out this slide show that I used in presenting a seminar at the Richmond Construction Expo this week relating to just these topics, and more. I may even be presenting as you read this post!

[slideshare id=2032505&doc=constructionexpopresentation-090921124645-phpapp02]

As always, please don’t hesitate to comment. Also, please subscribe to keep up with the latest Construction Law Musings.