mechanic’s lien – Construction Law Musings- Richmond, VA

Bankruptcy and the Virginia Mechanic’s Lien

Originally posted 2015-04-06 09:00:30.

: Image via Wikipedia

Unfortunately, developer bankruptcies are very much in the news these days. This news, while unsurprising in today’s economy and given the housing issues that hit last year, can give heartburn to those contractors that perform the site work, pave the roads, and of course build the houses at these developments. Like Musings has discussed before, bankruptcy of an owner or developer is a real possibility for which contractors and subcontractors must prepare.

However, contractors in Virginia may have a silver lining for the bankruptcy cloud. Virginia mechanic’s liens, being creatures of statute, survive bankruptcy and remain in force even after the owner of the property files for bankruptcy. Even more importantly, the 6 month statute of limitations on filing a case to enforce your mechanic’s lien stops running as of the date that bankruptcy is filed.

Even more importantly, aside from certain specific situations, mechanic’s liens in Virginia gain priority over all other secured liens.

In short, in today’s climate, contractors should not feel that they are completely helpless in the bankruptcy fight. Filing a mechanic’s lien after consultation with an experienced attorney can put a contractor or subcontractor in as good a position as possible should he owner of a project file for bankruptcy.

Please comment below, or subscribe to Musings if you find this of interest.

Back Posting with Thoughts on Lien Waivers

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

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.

Image via Wikipedia

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.

Interesting Perspectives on Construction Law from Friends

Originally posted 2013-10-23 09:15:47.

As I have been in a bit of the throes of writers block here at Musings (hey, it happens), I did what I always do and check the great sources of information in my blog roll and Feedly feeds for any fodder to discuss.

In doing so, I ran across two interesting posts, one from my pal Matt Bouchard (@mattbouchardesq) down in Raleigh, NC entitled “Mediator/Arbitrator Hybrids: The Next Big Thing in Construction Dispute Resolution.” In this post (which I will not go into much detail about here) Matt discusses a contractual procedure where one person acts as a mediator and arbitrator in a procedure summarized (after a full outline of the contractual provisions) by Matt as follows:

There you have it: soup-to-nuts construction dispute resolution within 65 days, no muss, no fuss. The procedure features one neutral, serving as both the mediator and the arbitrator, with virtually no time at all transpiring between the end of the mediation and final resolution of the arbitration.

Continue reading Interesting Perspectives on Construction Law from Friends

Construction Law- Where Pragmatism and Law Collide

Originally posted 2019-10-25 10:40:49.

If there is one “theme” to Construction Law Musings, those that read regularly hopefully see that I take my role as counselor to construction companies seriously. Aside from the fact that litigation and arbitration are both expensive and not a great way for any business, particularly a construction business, to make money, I have found construction professionals to be a pragmatic group of people that would rather solve a problem than go to court. Continue reading Construction Law- Where Pragmatism and Law Collide