HB1265: Significant VA Mechanic’s Lien Change Bill Pending

02/07/2012

Del. Purkey has advanced HB1265 to require pre-notification of intention to file mechanic’s liens by contractors at least 60 days in advance before filing the lien. If passed, this bill would have a significant impact upon current Virginia mechanic’s lien law, and have significant practical implications for not only contractors, but also owners and clerks of court too.

Click Here to view the bill and its current status can be seen in their entirety.

The key add to existing law is the following:
At least 60 days prior to filing a memorandum of lien pursuant to this section, a lien claimant shall send a copy of the memorandum and written notice of the lien claimant’s intention to file the memorandum by certified mail, return receipt requested, to the owner of the property at the owner’s last known address. After the expiration of this 60-day period, the lien claimant may file a memorandum of lien. The lien claimant shall also file with the clerk a copy of the written notice sent to the property owner and certify that such notice was sent. The clerk shall not accept or record any memorandum of lien filed prior to the expiration of this 60-day period or that is not accompanied by a copy of the notice sent to the property owner.

If adopted, there are numerous unresolved questions and complications, including:
– what if the payment status changes in the interim?
– how does one deal with payments that are not even yet due, such as jobs on a 30 day payment cycle, or retainage, among other questions?
– where will the clerk record the notices, and how will they affect the owner’s title (will it be a cloud on title) and how might it affect owner obligations to others, such as loan agreements that often can trigger default by such notices?
– what if the “draft” lien has defects? Can they be cured? Will drafts be strictly construed like filed liens are currently?

There are many other questions and complications of course, and regardless of intention for this proposed legislation, the result is likely going to be confusion, and lead to a plethora of litigation if passed. Every contractor should be opposed to this bill, as should government bodies, and clerks of court in particular, and owners. If the intention is to address a particular concern with the current law, other options should be explored as the only persons that will benefit from the passage of this bill will be us construction lawyers.

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