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VIRGINIA
Tuesday, June 17, 2008
All persons performing labor or furnishing materials of the value of $50 or more for the construction, removal, repair or improvement of any structure may file a lien upon the structure. Those who may use the mechanic's lien laws include general contractors (those who contract directly with the owner), subcontractors (those who contract, not with an owner, but with a general contractor), and sub-subcontractors (those who contract with a subcontractor). Materialmen who supply goods to the owner or any general contractor, subcontractor or sub-subcontractor may also use the mechanic's lien laws.
The general contractor may file a lien at any time after the work is commenced or materials furnished, but not later than 90 days from the last day of the month in which the contractor last performs labor or furnished materials, but in no event later than 90 days from the time the building is completed.
No memorandum may include sums due for labor or materials furnished more than 150 days prior to the last day on which labor was performed or material furnished. A memorandum, however, may include sums withheld as retainage with respect to labor performed or material furnished at any time before the memorandum is filed. That sum may not exceed 10 percent of the total contract price. Claimants should file liens at least every 150 days. However, if the work is performed or the materials are furnished pursuant to individual purchase orders, mechanic's liens should be filed every 90 days.
The main elements of a lien memorandum are as follows: name of owner, address of owner, name of claimant, address of claimant, type of materials or services furnished, amount claimed, type of structure on which work done or materials furnished, brief description and location of real property, date from which interest on the above amount is claimed and signature of claimant or its authorized agent. In addition, the memorandum must contain an affidavit by the claimant or its agent that the owner is justly indebted to the claimant in the amount claimed by the lien. An improper property description or location is the most frequent fatal error committed by contractors attempting to file mechanic's liens.
The memorandum of mechanic's lien is recorded in the clerk's office of the circuit court of the county where the property, or a part thereof, is located.
A subcontractor, in order to perfect a lien, must file a memorandum of mechanic's lien claimed by subcontractor. The information required of the subcontractor is similar to that required of the general contractor except that the subcontractor must state the name of the general contractor in its lien. In addition, unlike the general contractor, the subcontractor must give notice in writing to the owner of the property of the amount and character of the subcontractor's lien. The subcontractor's memorandum of lien must be filed within the same time constraints as those for a general contractor.
A sub-subcontractor must file a memorandum of mechanic's lien claimed by a sub-subcontractor and must give notice in writing to the owner (or his agent) and to the general contractor (or his agent) of the amount and character of the sub-subcontractor's claim. The form of memorandum required of the sub-subcontractor is substantially the same as that required of the general contractor and subcontractor, except that the sub-subcontractor must identify the general contractor and the subcontractor involved. The sub-subcontractor's lien also must be filed within the same time constraints as those for a general contractor and should otherwise comply with the rules regarding perfection of liens filed by general contractors.
The general contractor may perfect a lien for the entire amount due him as of the date the lien is filed, including sums withheld as retainages for labor and material provided before the lien is filed. The amount of retainage claimed in the lien may not exceed 10 percent of the total contract price.
A subcontractor may perfect a lien for the amount due him, but his lien cannot exceed the amount which the owner is indebted to the general contractor on behalf of the subcontractor at the time the contractor gives notice to the owner, or the amount that the owner thereafter becomes indebted to the general contractor.
A sub-subcontractor may perfect a lien for the amount due him, but his lien cannot exceed the amount for which the subcontractor could himself claim a lien by virtue of the general contractor's indebtedness to him.
Often the person who files a memorandum of mechanic's lien has no intention of enforcing the lien. Instead, the lien is filed for the purpose of obtaining leverage over an owner or contractor in a payment dispute. Owners often are under a duty to construction lenders not to permit liens to be placed on the property. Similar duties are often placed on general contractors to owners and on subcontractors to general contractors. Consequently, if a lien is filed -- or even threatened -- this may force the owner, general contractor or subcontractor into reaching some satisfactory agreement regarding payment of the claim. Hence, the mere threat of filing a lien may be effective. However, in other cases, filing the lien may not produce the desired effect and suit must be brought to enforce the lien. It is absolutely essential that suit to enforce the lien be filed within the time period required by law. No suit to enforce a lien shall be brought after six months from the time when the lien was recorded or after 60 days from the time the structure was completed, whichever time shall occur last.