Monday, April 26, 2010

Virginia Mechanics Lien "How To"

Liens filed on private properties are known as Mechanics’ Liens in the state of Virginia. A lien that is filed with regard to work performed on privately owned property attaches to and encumbers the fee simple ownership of property.  Mechanics liens can help you get your money because on a private project, the mechanics’ lien places an encumbrance on the property that makes it difficult to resell or re-finance the property without first removing the lien.

All persons providing labor or materials worth $50 or more for the construction, repair, or improvement or removal of any permanent building or structure next to real estate or railroad is entitled to a mechanics’ lien in the state of Virginia. Architects are also entitled to mechanics’ lien rights.

To file a construction lien in Virginia, there are certain pre-requisites that must be followed.  One of the requirements is that a pre-lien notice be filed.  Pre-notices are required in certain circumstances. A subcontractor may pursue personal liability against an owner under Virginia’s mechanics’ lien statute. In order to do so, a subcontractor must give notice to an owner or its agent and file an affidavit verifying the amount due within thirty (30) days from the time that the structure or project is completed. The same would be true for a sub-subcontractor attempting to assert personal liability claims against a general contractor.

An owner is permitted by statute to designate a mechanics’ lien agent when a building permit is issued. Notice must be given to the agent within thirty (30) days of the first date that the materialmen perform labor or furnish material to the building or structure or within thirty (30) days of the date a building permit is issued if such labor or material are first performed or furnished by such person before the issuance of the building permit. While the failure to give notice does not bar recovery, a lien claimant’s recovery would be limited to value of the labor of materials provided on or after the date of that the pre-notice is given to the owner’s agent.

With regard to the filing of a construction lien itself, under Virginia’s statute, a mechanics’ lien must be filed by a lien claimant within 90 days from the last day of the month in which the claimant last performed labor or furnished material but in no event later than 90 days from the time such building, structure, or railroad is completed.  The 90 day time period would also begin to run from the date of termination if that situation occurs on a project.

Further, under Virginia statute, the lien may only include labor or materials furnished within 150 days from the last date labor was performed or materials provided to the project.  Accordingly, while the statute allows a lien claimant 90 days from your last day of the month in which work or materials were provided in which to file a lien, that lien may only include the value of the labor or materials that were furnished within the prior 150 days.  Retainage is excluded from the 150 day limitation by statute.

In order to file a mechanics lien in Virginia, you must have a contract.  That contract does not need to be written, but can be oral, express or implied.

In addition to filing a Virginia construction lien, stop notices are also a helpful tool for getting paid.  A Stop Notice is a notification that has the ability to enhance the effectiveness of a mechanic’s lien. A Stop Notice, or a notice to withhold funds, is sent to the company that is financing or funding the construction funds for a project. Once that company receives the Stop Notice, that company has notice that it should withhold sufficient money to satisfy the stop notice claim. The purpose of the Stop Notice is to provide the lender, financiers or funders of the construction project notice that there is money owed to a contractor, subcontractor or supplier so that an inquiry can be made as to why that money is not being paid.

For more information on filing a Virginia Construction Lien, a Virginia Mechanics Lien, a Virginia Stop Notice, or a Virginia pre-lien notice, please visit http://www.lienitnow.com/virginia-faq.asp.

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