As those that read this construction law blog are aware, I am a big fan of mechanic’s liens as a way to get paid. These powerful and tricky beasts are a great way to get an owner’s attention and to put payment pressure on those that owe you money.
Recently I was reminded that getting a lien prepared and recorded both carefully and quickly can be key to getting paid on a problem project. Not only should construction professionals keep the 150-day rule and the 90-day rule in mind, but they should also be quick on the trigger when it becomes clear that a mechanic’s lien will be necessary.
Why is moving quickly important? The reason to move with careful speed, particularly on a problem construction project, is that where multiple liens are recorded, the priority among them is determined by their date of recording. All of these mechanic’s liens have priority over any deed of trust securing financing used to fund construction (though not a deed of trust used to purchase any underlying land). However, the earlier recorded liens take priority over later recorded liens.
In other words, in a scenario where limited value exists and where any mechanic’s lien action filed timely and with the help of a Virginia construction attorney ends in foreclosure, the liens are paid out of the sale in order of priority. This means that if you are last in line among multiple lien claimants your lien may not get paid in full or even at all when the project is particularly problematic. In short, the early bird gets the worm is the saying of the day when it comes to mechanic’s liens.
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