With the downturn of the housing industry, we have seen a dramatic increase in the number of construction disputes, especially in residential construction. Owners are battling with the contractors, and subcontractors are trying to get paid by somebody. These cases lead inevitably to litigation.
The property owners and the building contractor should have a written contract. However, the subcontractors sometimes find themselves in a difficult situation, unpaid by an insolvent building contractor. It is usually then that we will receive a call from a subcontractor asking about their mechanic’s lien rights. Unfortunately, it may be too late for that subcontractor to preserve their mechanic’s lien rights because they failed to provide proper notice at the outset of the work performance. This blog post provides a brief overview of the notice requirements for subcontractors to preserve mechanic’s lien rights.
To assert rights under the mechanic’s lien statutes, the subcontractor must provide notice. There are two different provisions under the mechanic’s lien statutes that provide potential relief to the subcontractors performing residential construction.
If the property owner has designated a Mechanic’s Lien Agent, also called an MLA, the MLA will be identified on the building permit posted on the property. To preserve rights, the subcontractor must send a written notice to the MLA within 30 days of beginning to supply labor or materials. Although the subcontractor can send notice after that period of time has expired, the subcontractor can only lien for labor and materials supplied after the notice is provided.
The Virginia Code spells out the specific requirement of the notice, which includes the name, mailing address and telephone number of the company sending the notice; the building permit number; a description of the property as shown on the building permit; and a statement that the person filing such notice seeks payment for labor performed or material furnished. The notice must be sent by registered or certified mail, or must be physically delivered to the MLA at the address shown on the building permit.
The requirements of the Virginia Code must be strictly followed or the subcontractor’s lien rights will be denied. Your should regularly review the statutes and case law with your attorney to stay up-to-date with any recent changes.
Alternatively, a subcontractor can send a preliminary notice to the owner and/or the general contractor before supplying labor and materials to the project. This preliminary notice must contain the name, mailing address and telephone number of the company sending the notice; a description of the labor or materials that the subcontractor will supply; a description of the party to whom the claimant will supply labor and materials; and the estimated contract amount of the anticipated labor or supplies.
Within 30 days after completion of the entire project, the subcontractor must provide a second notice. The second notice must include a statement of account and an affidavit. Both notices must be sent by certified mail to the owner or the owner’s agent. Again, failure to strictly follow these statutory requirements may render the notices void.
The requirements of Virginia’s mechanic’s lien statutes are complicated. Virginia courts routinely deny the rights given by these statutes, if the contractor or subcontractor does not follow the rules strictly.
Do you have a routine procedure for providing notice before beginning work on a residential construction project? Such a routine will help protect very powerful rights to help you collect money you are due. Contact your attorney to help you properly use the legal tools available to you.
Tarley Robinson, PLC, Attorneys and Counsellors at Law
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