Month: July 2017

Mechanic’s Liens: Small Mistakes Can Have Large Consequences

Virginia’s mechanic’s lien process provides potential added security for contractors. A properly perfected mechanic’s lien provides for a secured interest respecting the property’s improvement, which can provide a means of recovery for non-payment that contractors otherwise would not have to secure payment for contract breach claims.

Virginia’s code suggests that the mechanic’s lien filing process is simple. Follow the stated filing requirements depending upon your level, the type of work or materials furnished, and the type of project and file your “memorandum” of lien in the land records where the project is located. Statutory forms are even provided in the code sections.

However, the process is not as simple as it would seem, and court interpretations over the years continue to highlight the hidden complexities of preparing and filing enforceable mechanic’s liens. Take, for example, a recent case decided in Hanover Circuit Court.

The contractor used one of the statutorily provided forms; however, in doing that the contractor used several variations of its name throughout the mechanic’s lien. When the contractor went to enforce its lien, the defendants in the case moved the court to invalidate the lien, arguing the mechanic’s lien insufficiently identified the contractor; one of the key requirements of mechanic’s lien effectiveness. The court agreed, and voided the mechanic’s lien; and because at that point the requisite filing period had expired the contractor could not refile with its correct name.

The court did allow the contractor’s lawsuit to proceed on the contractor’s breach of contract and unjust enrichment claims; however, if successful on those claims, the contractor will receive a judgment; but that judgment will be unsecured and may or may not be recoverable by the contractor. By not properly perfecting its mechanic’s lien, the contractor lost that tool for its claim enforcement toolbox. So, while seemingly simple means of recovery protection, this case illustrates the hidden complexities of mechanic’s lien, and pitfalls of a do-it-yourself approach.

ICC Releases Updated A117.1 Building Accessibility Standard

On June 29, 2017, the International Code Council (ICC), announced the release of an update to the 2009 ICC American National Standards Institute (ANSI) A117.1 Accessible and Usable Buildings and Facilities Standard. The ICC is the publisher of the International Codes or family of I-Codes as they are commonly known. One member of this family is the International Building Code (IBC), which has now been adopted in all 50 states.  Accessibility requirements are addressed in Chapter 11 of the IBC, including section 1101.2 which requires buildings and facilities to be designed and constructed to be accessible in accordance with the IBC and ICC A117.1 standard.

Where Chapter 11 of the IBC addresses accessibility scoping requirements such as the “what,” where,” and “how many,” ICC/ANSI A117.1 is the referenced standard for the technical provisions or the “how” necessary to properly execute accessibility requirements. The updated edition of the standard continues to meet or exceed provisions in the Americans with Disabilities Act Accessibility Guidelines and the Fair Housing Design Guidelines; both federal requirements.

In Virginia, the ANSI A117.1 is enforced through its incorporation by reference through the Virginia Uniform Statewide Building Code (USBC) via the ICC International Building Code. Unless directed otherwise by local code enforcement officials or policy, designers and contractors should always comply with the versions of codes presently enforced within the jurisdiction of the project, local requirements, and the latest versions of referenced standards such as the ICC/ANSI A117.1.

Succession Planning: Keeping What You Built Positively Moving Forward

The old saying, often attributed to Benjamin Franklin, is that “nothing is certain except death and taxes.” Established companies suffer similar certainties, and succession planning is one way to identify and develop company leaders who can avoid company struggles in advance of adverse events.

There are many reasons to consider succession planning; foremost being the identification and development of replacement leaders. Preparing and transitioning replacement leaders may entail internal or external grooming, and effective succession planning involves thoughtful, formal planning.

Effective succession planning begins with goal analysis. What is the long-term goal for the company? Does the company have the right people to achieve that long-term goal? If so, what is the grooming plan for, and plan to keep them? If not, how does the company get, groom, and keep the right people?

On the other side of successful succession is exit transition. Who is going to transition? What are the transition and exit incentives for them? When should their transition begin and the exit become effective? Will there be continuing roles for transitioning people, and what if any parts of the transition will become public knowledge, and when?

Company structure can affect many of these issues. Is the company a stock company? If so, what kind of stock company? Is the company a limited liability company? If so, how is membership and management structured? What are the specific requirements for amending bylaws or operating agreements? What are the limitations on transferring stock or membership interest?

Once the succession plan is formalized, documents should be put in place to coordinate them with the succession plan; including such things as creating or modifying buy-sell agreements, employment agreements, shareholder or member agreements, etc. As with most things in business, prior planning is critical; and, using another saying often attributed to Benjamin Franklin, his sage advice in the 1700s “if you fail to plan, you are planning to fail” remains true today.

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