17.2 Mechanics' Liens

LibraryVirginia Law and Practice: A Handbook for Attorneys (Virginia CLE) (2020 Ed.)

17.2 MECHANICS' LIENS

17.201 In General.

1. Statutory Creation. Va. Code § 43-1 et seq. and Va. Code § 43-67 et seq. pertain to mechanics' liens.

Mechanics' liens are created by statute and are designed to aid persons whose labor, skill, or materials enhance the value of real property or structures thereon. Va. Code § 43-3(A) states that:

[a]ll persons performing labor or furnishing materials of the value of $150 or more, including the reasonable rental or use value of equipment, for the construction, removal, repair or improvement of any building or structure permanently annexed to the freehold . . . shall have a lien, if perfected as hereinafter provided, upon such building or structure, and so much land therewith as shall be necessary for the convenient use and enjoyment thereof.

Va. Code § 43-2 contains a nonexclusive list of items constituting (i) structures permanently annexed to the freehold; (ii) materials for the improvement of buildings or structures that are permanently annexed to the freehold; and (iii) certain types of work that are deemed to be materials.

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The lien has its foundation in a contract with which the lien must correspond. 82 The use of the materials and labor under the contract gives rise to the right to perfect and enforce a lien. The lien is inchoate until perfected, and it can be lost if it is not enforced within the time and in the manner prescribed by statute. 83

2. Statutory Construction.

a. Creation and Perfection of Lien. The statutes concerning the creation and perfection of mechanics' liens are in derogation of the common law and are strictly construed. 84 The very existence of a mechanics' lien, as well as the jurisdiction of the court to enforce it, depends upon the statutes and not upon equitable rules. 85 While this rigid statutory construction occasionally results in a hardship, this is the law of Virginia. 86 However, Va. Code § 43-15 states:

No inaccuracy in the memorandum filed, or in the description of the property to be covered by the lien, shall invalidate the lien, if the property can be reasonably identified by the description given and the memorandum conforms substantially to the requirements of §§ 43-5, 43-8, and 43-10, respectively, and is not willfully false.

While this seems to allow a certain liberality in the perfection of the lien, these statutory sections specify a form to be used by the appropriate claimant depending on whether the claimant is classified as a contractor or a subcontractor, so this apparent saving statute is not as lenient as it may seem. Va. Code § 43-15 has been strictly construed to apply only to

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the description of the property on which the claimant has worked and none other. 87

Failure to strictly conform to the statutes can be fatal to a contractor's claim. In Custom Stone Co. v. Solid Concepts, Inc., 88 after the property owner/developer of a residential subdivision failed to pay its general contractor and the general contractor then did not pay its subcontractors, a subcontractor filed a mechanics' lien against one of the lots in the subdivision. The subcontractor used the suggested statutory form for general contractors, not the suggested form for subcontractors. Thus, the memorandum of lien did not identify the general contractor. The court concluded that the memorandum failed to comply with Va. Code § 43-7, released the lien, and dismissed the complaint.

b. Enforcement of Lien. The requirements for enforcing a validly perfected mechanics' lien are to be liberally construed, and it appears that only substantial compliance is necessary. 89 This is not true, however, when it comes to necessary parties.

17.202 Who May Claim the Lien.

A. Identifying a Mechanics' Lien Claimant. The lien claimant must be the individual or entity that entered into the contract underlying the particular claim. 90 A memorandum of mechanics' lien is invalid where the memorandum names as the claimant an entity other than one entering into the underlying contract. 91 A memorandum of mechanics' lien that fails to name the claimant correctly does not substantially comply with the statutes "because it does not provide sufficient notice as to the identity of the claimant." 92

It is also critical that the person acknowledging the memorandum on behalf of the claimant identify his or her capacity to act or agency relationship with the claimant.

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B. Laborers and Suppliers. The work performed or the materials furnished must be for the construction, removal, repair, or improvement of a building or structure permanently annexed to the freehold, and the work or materials must be worth $150 or more. 93

Laborers performing the work make up one class of claimants. They can be skilled or unskilled, supervisory or menial. Persons furnishing materials make up the other broad category of claimants. The nonexclusive list in Va. Code § 43-2 can help determine whether a particular potential claimant is, in fact, able to use the mechanics' lien statute. This list has become more extensive over time and includes the categories "earth moving," "grading," "excavation," and "surveying" for some situations that without such a list would be difficult to determine. 94

C. Architects, Engineers, and Surveyors. Architects or engineers who draw plans or plats but do not participate in the construction or supervision of construction are probably not entitled to claim a lien. 95 Surveyors, however, are protected under the definition of "materials furnished" found in Va. Code § 43-2 to the extent that "surveying . . . [is] required for the improvement of the grounds upon which such building or structure is situated."

D. General Contractors and Subcontractors.

1. Categories. Laborers and material suppliers are categorized as general contractors or subcontractors under Va. Code § 43-1. These statutory definitions are not necessarily consistent with those generally used in the construction trade. The status of the claimant as a general contractor

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or subcontractor is determined by the claimant's privity or lack of privity with the owner of the property. 96

2. General Contractors. Va. Code § 43-1 states that a general contractor includes "contractors, laborers, mechanics, and persons furnishing materials, who contract directly with the owner." Thus, there can be more than one general contractor for the same job. 97 This is contrary to the traditional construction trade practice. A joint venturer who acts as a general contractor may enjoy a dual capacity. 98

3. Subcontractors. Va. Code § 43-1 defines subcontractors as "all such contractors, laborers, mechanics, and persons furnishing materials, who do not contract with the owner but with the general contractor." Obviously, there can be more than one subcontractor on any job, and a subcontractor may work under more than one general contractor.

17.203 Property Subject to the Lien.

A. In General. Va. Code § 43-3 states that the lien must be on a building or structure and so much land as is necessary for the convenient use and enjoyment thereof. Thus, the lien of the general contractor or subcontractor is not necessarily on the entire tract of real property on which the building or structure is located but may be only on a portion of it, unless the entire tract is necessary for the convenient use and enjoyment of the building or structure. 99

Under Va. Code § 43-3(D), a person who performs labor without a valid license or certificate issued by the Board for Contractors, or without the proper class of license for the value of the work to be performed, when such a license or certificate is required by law for the labor performed is not be entitled to a lien pursuant to this section.

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B. Public Property.

1. In General. Buildings or structures erected under a contract with the commonwealth or a political subdivision thereof, including cities, counties, and other quasi-public entities, such as sanitary districts and water authorities, that are "used for public uses or purposes" are exempt from the application of Virginia's mechanics' lien law. 100 Property is not subject to a mechanics' lien if the buildings or structures erected on the property are "for public uses" of the commonwealth. 101 This principle is ordinarily applied in cases where the public entity owns the property and itself contracts for improvements on that property. 102

2. Federal Miller Act. Pursuant to the Miller Act, 103 any contract for construction, alteration, or repair of a public building or public work of the United States must include performance and payment bonds. 104 The payment bond covers those who supply labor or materials directly to the prime contractor or to its subcontractors. 105

3. Virginia's "Little Miller" Act. If a state public construction contract is awarded by any public body, as defined by Va. Code § 2.2-4301, in an amount exceeding $500,000, the prime contractor must furnish a payment bond in the sum of the contract amount. 106 A laborer or material supplier who has a direct contractual relationship with the contractor and who has not been paid within 90 days of last furnishing labor or materials may bring a suit on the contractor's bond to recover the amount due. 107 If the contractor has not required a payment bond from the subcontractor with whom the claimant has a contractual relationship, the

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claimant may not bring an action on the contractor's payment bond unless he or she has given written notice of the claim to the contractor within 90 days of last furnishing labor or materials. 108 In addition, contractors and sureties may not contract for a shorter period of time within which material suppliers must give notice of claims against subcontractors. 109

C. Multiple Contracts, Lots, Units, or Buildings. Since a claimant is generally entitled to a lien for work done or materials furnished in the improvement of real property but on only so much as is necessary...

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