Brian Clarke | Sands Anderson
Mechanic’s liens have long been a valuable tool for mechanics and materialmen in the Commonwealth to secure their rights to payment. Yet, despite mechanic’s liens having been in existence for well over a century, properly perfecting and enforcing a mechanic’s lien continues to prove an extraordinarily difficult task, even for experienced litigators.
While the intricacies that go into perfecting and enforcing a mechanic’s lien are far too numerous to capture in a single blog post, this article serves as an overview of the basics for both perfecting and enforcing mechanic’s liens for general contractors in the Commonwealth.
Perfecting a General Contractor’s Mechanic’s Lien
Perfection is the process by which a mechanic or materialman creates a valid and enforceable lien. In Virginia, statutes governing the perfecting of mechanic’s liens are “strictly construed,” meaning even the most minor error can compromise the entirety of the lien.
The basic requirements for perfection of a mechanic’s lien by a general contractor in the Commonwealth are set forth in Virginia Code § 43-4. To perfect a mechanic’s lien in Virginia, the aforementioned provision requires a Memorandum of Mechanic’s Lien be filed in the clerk’s office where the property subject to the lien, or any part thereof, is situated.
Memorandum of Mechanic’s Lien Timing Requirements
The deadline for filing the Memorandum is 90 days. However, when the 90 days begins to run depends on the specific facts at issue and whether the overall work on the project has been terminated.
If work on the project as a whole has not been terminated, the Memorandum must be filed within 90 days of the last day of the month in which labor or materials were last furnished by the claimant to the property. For example, if the claimant last furnished labor or materials to the property on July 11, the claimant would have 90 days from July 31 to file the Memorandum.
This rule is more limited when it comes to the overall work, as the Memorandum must be filed within 90 days from the date the work on the projected terminated. Thus, taking the above example, if work terminated on the project on July 11, the claimant would only have 90 days from July 11—not July 31—to file the Memorandum.
Information to Include in a Memorandum of Mechanic’s Lien
In addition to ensuring the Memorandum is timely filed, a lien claimant must also ensure that the necessary information is included in the Memorandum. In Virginia, the following information must be included:
- Name(s) and address(es) of the owner(s) of the property to be charged
- Name(s) and address(es) of the lien claimant(s)
- The amount(s) of the claim
- A description of the labor and/or materials furnished that make up the claim
- A description of the structure, building, or railroad for which the labor and/or materials were furnished
- A reasonable description of the real property to be charged
- The time when the amount(s) are due and payable
- The date from which interest on the amount(s) is claimed
- The lien claimant’s license or certificate number
- The issue date and expiration date of the lien claimant’s license of certificate
- A statement of the claimant’s intent to claim the benefit of a lien
- An affidavit executed by the lien claimant or his/her agent verifying the amount(s) claimed and the claimant’s intent to claim the benefit of the lien on the property described in the Memorandum
Timing Requirements for Labor and Materials Cost
Another key consideration is what amounts to include. Virginia strictly adheres to the 150-day rule for mechanic’s liens. The 150-day rule requires that no amounts be included in a mechanic’s lien for labor or materials furnished more than 150 days prior to the last date the claimant furnished labor or material to the project.
Thus, if the claimant last furnished labor or materials to the project on July 11, the claimant could only include amounts related to labor or materials furnished within 150 days of July 11, i.e., amounts related to labor and/or materials furnished after February 11. Including any amounts outside of this look-back window may render the entirety of the lien unenforceable.
Perfecting a mechanic’s lien also requires compliance with all notice requirements. Who needs to be given notice can vary depending on the circumstances and, in some situations, pre-filing notice may be required.
Enforcing the Lien
Like perfecting a mechanic’s lien, enforcing a lien can also be a complex process. However, while the requirements of perfection are strictly construed, requirements relating to the enforcement of a mechanic’s lien are liberally construed in favor of the lienor. Nonetheless, one seeking to successfully enforce a mechanic’s lien must be careful to comply with all requirements.
A mechanic’s lien is enforced by filing a civil complaint to enforce the lien. The time limit for filing a suit to enforce a mechanic’s lien is the later of:
- Six months after the time when the Memorandum was recorded
- Sixty days from the time the building, structure, or railroad was completed, or the work thereon otherwise terminated.
Naming Necessary Parties in a Mechanic’s Lien Lawsuit
In addition to timely filing suit to enforce a mechanic’s lien, the claimant must name all necessary parties as defendants in the suit. The necessary parties in Virginia include all parties with a relevant interest in the property that is subject to the lien.
Nonetheless, Virginia has interpreted “necessary parties” broadly in relation to the enforcement of mechanic’s lien. Accordingly, if there exists a reasonable basis to conclude that a party may have some interest in the lien or property, that party should be named as a defendant in the suit.
Additionally, to enforce a mechanic’s lien in Virginia, the lien claimant must file an itemized statement of account verified by an affidavit of the claimant or its agent. The itemized statement must include the following factors:
- The amount and character of the work done or materials furnished
- The prices charged therefor
- The payments made, if any
- The balance remaining due
- The time from which interest on the amounts due is claimed
Crafting a mechanic’s lien is a complicated process, and this post covers only the basics for perfecting and enforcing a lien in Virginia. The task of perfecting and enforcing a lien can be a daunting one, and a general contractor seeking to secure its payment rights through a lien should consult with an attorney with experience in the area.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.