I hope that headline got your attention because this is a reminder to contractors and subcontractors that the Virginia mechanic’s lien statute has several different time limits. One is the 90 day statute of limitations on filing your memorandum. This “90 day rule” is generally well known among construction professionals I talk to and work with on a daily basis.
A limit that is less familiar (often because most trades are not on a project long enough for this limit to kick in) is the so called “150 day rule.” The 150 day rule states that a contractor or subcontractor can only capture money owed for work performed or materials furnished to a project within 150 days of the last day on which the contractor performed work or the date of filing of the lien. Retainage or retention is not subject to this rule.
This limitation is a big one because including money in a lien to which a contractor or subcontractor is not entitled will lead to the invalidation of the lien regardless of the amount of the overage. Prior to the change in the economy, this limitation most affected site contractors and others that were “first in and last out” of a project. With the economy for construction being slow in recent years, project delays, temporary stoppages and flat out slowdowns in payment have put more general contractors and trades in the cross hairs of this look back limitation on what can be included in the lien.
A silver lining to the potential dreariness caused by this rule is the fact that the statute allows multiple liens. In other words, if you are not getting paid for work at the beginning of the project, you (and preferably with the counsel and early assistance from your experienced construction attorney) can file one lien for the first 150 days of work and another later to catch the later work if necessary. Also, one more simple method to make sure that this limitation is kept at bay is to make sure that the oldest invoices or pay applications are paid first, thus front loading any accounts receivable.
The 150 day rule is here to stay. In an economy where mechanic’s liens may be the best (and possibly only) protection for a construction professional on a particular construction project, keeping it in mind is a requirement for any construction company and its legal counsel.
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Very good advice Chris, and one that good hearted (i.e. patient) folks get burned on. Way better to call your attorney early rather than too late and learn the hard way.
Thanks for the comment Tim. One of the great things about representing contractors is that they’re generally business minded and seek to work problems out. However, like you point out, this can sometimes work to their disadvantage.
This post is also a reminder of why you should consult a lawyer in your jurisdiction and not rely on “do it yourself” advice you try to pick up for free from the ‘net. Because Virginia’s lien laws are *much* different than NC. In NC, so long as the lien is timely filed, you can collect for the standard 3 year statute of limitations period. [Moral of the story? Don’t ask an NC lawyer for help w/ your VA lien, or vice versa, and you get what you pay for, and all of that]
Thanks for your continued comments Melissa. You are so very right that liens are not a good candidate for DIY, nor or their requirements uniform from state to state.
Thanks a lot for the very helpful advices you have here. I agree that consulting to a construction lawyer is really essential before starting with a project.