07/12/2017 by Attorney Neil S. Lowenstein
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.