Back Posting with Thoughts on Lien Waivers

Originally posted 2015-05-18 09:00:46.

The seals of the Commonwealth of Virginia
The seals of the Commonwealth of Virginia (Photo credit: Wikipedia)

After a week of being unable to post due to the rigors of my solo construction practice, I’m back on the blogging train.  For those of you that missed my new musings this past week, I hope that you had a chance to look through some of the past Guest Post Friday posts for some good stuff to read.

During the course of my busy week last week, a question came up regarding the mechanic’s lien waivers that commercial construction companies routinely execute as part of the payment process.  The waiver forms vary, but each essentially states that in exchange for payment the payee, whether a subcontractor or supplier (or even general contractor) waives its future rights to record a mechanic’s lien for the work that is covered by the payment received.  Most if not all of these forms further require a certification that the funds paid will either be used to pay suppliers or that suppliers have already been paid.  This general description is not the reason for this post.

Continue reading Back Posting with Thoughts on Lien Waivers

Mechanic’s Liens- Big Exception

Originally posted 2012-11-12 09:00:03.

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Musings has discussed mechanic’s liens on numerous occasions.

As we discussed in earlier posts, the general rule is that a mechanic’s lien jumps to the head of the line of liens when filed. This is true in most instances. In the typical case, a contractor puts up a building and, when the owner refuses payment, it files a mechanic’s lien that takes priority over all other liens on that property, including the construction loan deed of trust (or mortgage, depending on your state’s property laws).

However, in Virginia, an exception exists. The Virginia Code provides that in a case where there is a loan on the land with a deed of trust, and then a construction loan with its own security in the land, the first lien holder can enforce its lien up to the value of the original and unimproved land on which it placed its lien. The mechanic’s lien holder takes priority on any value added to the property based on any improvements (i. e. the building itself) over any other liens.

When the construction loan is secured by the same deed of trust as the purchase loan, the mechanic’s lien takes precedence. Of course, these are the general rules. Your particular situation must be examined carefully by an attorney or other professional experienced in mechanic’s liens to determine the priority of your lien.

As always, please comment below and/or subscribe to receive updates on this and other topics here at Musings.

Happy Holidays from Construction Law Musings

We are nearing the end of another year and looking forward to the next.  For a shorter or longer time, all of the family is home for some Christmas cheer while Musings takes some holiday R&R.

I wish you all Happy Holidays and Merry Christmas from The Law Office of Christopher G. Hill, PC, and Construction Law Musings. To all of my friends, colleagues, and most importantly, family, I hope you have a safe, warm, and wonderful holiday.

Thank you for your continued support and I look forward to a great 2024 with you, my readers.

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Aarow Equipment v. Travelers- An Update

Originally posted 2015-01-12 09:00:08.

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Previously here at Musings, I discussed the application of pay if paid clauses and the Miller Act.  The case that prompted the discussion was the Aarow Equipment & Services, Inc. v. Travelers Casualty and Surety Co. case in which the Eastern District of Virginia Federal Court determined that a “pay if paid” clause coupled with a proper termination could defeat a Miller Act bond claim.  However, as I found out a couple of weeks ago at the VSB’s Construction Law and Public Contracts section meeting, the 4th Circuit Court of Appeals reversed and remanded this case in an unpublished opinion (Aarow Equipment & Services, Inc. v. Travelers Casualty and Surety Co.)

In it’s opinion, the 4th Circuit looked at some of the more “interesting” aspects of this case.  One of these circumstances was that Syska (the general contractor) directed Aarow to construct sedimentary ponds and other water management measures around the project (the “pond work”), which both agreed was outside of the scope of the work defined in their subcontract.  Syska asked that the government agree to a modification of the prime contract and asked Aarow to wait to submit its invoice for the pond work until after the government issued a modification to the prime contract and Syska issued a change order to the subcontract.

Several months later, no modification or change order had been issued, and Aarow submitted an invoice to Syska for the completed pond work. Syska instructed Aarow to list the pond work under a line item designated for certain finishing work on the project that had not yet been completed.  The government denied the subsequent change order request (submitted by Syska), stating that the pond work was in the scope of the original contract and Syska withheld money owed for other aspects of the work to make up the difference for the previously billed pond work.

Continue reading Aarow Equipment v. Travelers- An Update

No Damages for Delay May Not Be Enforceable in Virginia

Anyone who reads Construction Law Musings with any regularity (thank you by the way) knows that the contract is king in most instances here in Virginia.  Any commercial construction subcontractor in Virginia is likely also very familiar with so-called “no damages for delay” clauses in construction contracts.  These clauses essentially state that a subcontractor’s only remedy for a delay caused by any factor beyond its control (including the fault of the general contractor), after proper notice to the general contractor, is an extension of time to complete the work.  However, in 2015 the Virginia General Assembly passed a change in the law that precluded the diminishment of any right to claims for demonstrated additional costs prior to payment.  This left open the question as to which types of “diminishment” would be barred by the statute.

The recent case out of the Eastern District of Virginia federal court, Strata Solar LLC v. Fall Line Construction LLC, added a bit of clarity. Continue reading No Damages for Delay May Not Be Enforceable in Virginia

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