In Virginia, a lien claimant may make a\nclaim for a mechanic\u2019s lien by completing and recording a \u201cMemorandum for\nMechanic\u2019s Lien\u201d document. There are separate versions of the Memorandum\ndepending on whether the claimant is a contractor, subcontractor, or\nsub-subcontractor. <\/p>\n\n\n\n\n\n\n\n
In general, a mechanic\u2019s lien claim is\nmade when a property owner or other person in the chain has not paid the\ncontractor or others owed payment. The lien works as a security device by placing\nan encumbrance on the improved property, which in turn prompts the property\u2019s\nowner to pay in order to remove the lien. Liens can also be sought against\npayment funds, for example, by preventing a contractor from being paid by the\nowner until the subcontractors are paid. <\/p>\n\n\n\n
By a General\nContractor<\/strong><\/p>\n\n\n\n A general contractor must file a\nmemorandum of lien at any time after the work is commenced or material\nfurnished, but not later than 90 days from the last day of the month in which\nhe last performs labor or furnishes material, and in no event later than 90\ndays from the time such building, structure, or railroad is completed, or the\nwork thereon otherwise terminated. Va. Code \u00a7 43-4. The memorandum is\nthen filed in the clerk\u2019s office in the county or city in which the building,\nstructure or railroad, or any part thereof is located. Id. The\nmemorandum must show: (1) the name of the owner of the property sought to be\ncharged, (2) the claimant of the lien, (3) the amount and consideration of his\nclaim, (4) the time or times when the claim is or will be due and payable, (5)\na sworn statement by the claimant or his agent, declaring his intention to\nclaim the lien, and (6) a brief description of the property on which he claims\na lien. Id. In addition, it contains the claimant\u2019s license or\ncertificate number issued by the Board for Contractors, if any, and the date\nsuch license or certificate was issued as well as the date such license or\ncertificate expires. Id.<\/p>\n\n\n\n A general contractor lien claimant must\nsubmit a certification of mailing of a copy of the memorandum of lien to the property\nowner, at the owner\u2019s last known address, when recording the memorandum of\nlien. Id. The verification must be completed and signed while in the\npresence of a licensed notary.<\/p>\n\n\n\n By a Subcontractor<\/strong><\/p>\n\n\n\n A subcontractor follows the same general\nrequirements for a lien by a general contractor to perfect a lien. In addition,\nthe subcontractor must also give notice in writing to the owner of the property\nor his agent of the amount and character of his claim. Va. Code \u00a7 43-7.\nThe subcontractor\u2019s lien may not exceed the amount that the owner is indebted\nto the general contractor at the time the notice is given. Id. The subcontractor\u2019s\nform is similar to the form for a general contractor, but includes additional\nentries for the general contractor\u2019s and property owner\u2019s names.<\/p>\n\n\n\n By a\nSub-subcontractor<\/strong><\/p>\n\n\n\n Sub-subcontractors (and\nsub-sub-subcontractors and so on) may also claim a lien. The same provisions\nfor general and subcontractors apply as far as timelines and what must be\nincluded in the claim. However, in addition, the sub-sub must give notice in\nwriting to the owner of the property, or his agent, and to the general\ncontractor, or his agent, of the amount and character of his claim. Va. Code\n\u00a7 43-9. The lien amount may not exceed the amount for which such\nsubcontractor could himself claim a lien. Id.<\/p>\n\n\n\n Virginia Lien\nWaivers<\/strong><\/p>\n\n\n\n Lien waivers are quid-pro-quo arrangements\nbetween contractors and owners. The purpose of such a waiver is to induce payment\nfrom an owner in return for the contractor waiving any future mechanic\u2019s lien\nrights.<\/p>\n\n\n\n In Virginia, any right to file or enforce\nany mechanics\u2019 lien may be waived in whole or in part at any time by any person\nentitled to such lien, except that a subcontractor, lower-tier subcontractor,\nor material supplier may not waive or diminish his lien rights in a contract in\nadvance of furnishing any labor, services, or materials. Va. Code \u00a7 43-3(C).\nA provision that waives or diminishes a subcontractor\u2019s, lower-tier\nsubcontractor\u2019s, or material supplier\u2019s lien rights in a contract executed\nprior to providing any labor, services, or materials is null and void. Id.<\/p>\n\n\n\n The Virginia legislature does not mandate\na required form of a lien waiver, so common law principles of contract allow\nfor the parties to use any form that clearly spells out their intentions. Note\nthat it is a felony for any person to knowingly present a waiver form to an\nowner, his agent, contractor, lender, or title company for the purpose of\nobtaining funds or title insurance if the person forges or signs the form\nwithout authority. Va. Code. \u00a7 43-13.1.<\/p>\n\n\n\n Waivers fall under two broad categories of\neither \u201cconditional\u201d and \u201cunconditional.\u201d Each comes\nwith benefits and risks, so take care to use the correct form for the\nsituation. A\nconditional waiver depends on the actual receipt of payment, so use a conditional\nwaiver when a party pays with a check but the claimant doubts whether it might\nclear. Therefore, if the check doesn\u2019t clear the bank, it is still possible to claim\na lien down the line. This type of waiver offers greater protection to the\ncontractor.<\/p>\n\n\n\n An unconditional waiver works in the\nopposite fashion. The unconditional waiver is effective when presented to the\nowner or other party, regardless if the check is valid. If you unconditionally\nwaive a lien, you can still sue on a breach of contract or other legal theory,\nbut that is no substitute for the protections and ease of a mechanic\u2019s lien in\nrecovering any money owed. An unconditional waiver gives an owner more\nprotection while taking away some rights from the contractor.<\/p>\n\n\n\n Within the categories discussed above,\nthere are two subcategories of waivers for a \u201cpartial\u201d or \u201cfinal\u201d payment. A\npartial payment waiver is used when a partial or progress payment is made. This\nwaiver protects the owner to the amount he or she has made as a partial\npayment. Think of it as a receipt that shows the owner has at least paid up to\nthat amount. A final waiver, on the other hand, is used when the final or full\npayment has been made.<\/p>\n\n\n\n When waivers are used properly, they can\nfacilitate the flow of business and encourage prompt payment without any\nunnecessary holdups. If the correct waivers are used, waivers are advantageous\nfor both a contractor and owner.<\/p>\n\n\n\n In conclusion, a mechanic\u2019s lien is a powerful tool when used properly. By keeping track of key dates and parties in each construction job, contractors can protect their rights.<\/p>\n\n\n\n