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Virginia’s Mechanic’s Lien Plus Statute: Making those in higher tiers personally liable separate from and regardless of mechanic’s lien rights

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Within Virginia’s mechanic’s lien article is a little known, and little used, mechanism providing for personal liability of higher tiers separate from that article’s mechanic’s lien rights. The title is “How owner or general contractor made personally liable to subcontractor, laborer or materialman.” It is actually a very simple process; and all it takes is two steps to effectuate.

Step One: If you have furnished labor or material to a general contractor or a subcontractor (per the Article, “subcontractor” includes all contractors, laborers, mechanics, and persons furnishing materials, who do not contract with the owner but with the general contractor) you, first, need to send a “preliminary notice” in writing to the owner or his agent or the general contractor, that “states the nature and character of [your] contract and the probable amount of [your] claim.” That is it. The statute provides no other details as to when the notice is required or other specifics about the notice. Although the presumed intention is that this “preliminary notice” is required before labor or materials are furnished, the statute does not expressly include such a requirement.

Step Two: Additionally, “after the work is done or material furnished” but “before the expiration of thirty days from the time the subject building or structure is completed or the work thereon otherwise terminated,” you then are required to provide a “second notice” that states:

    1. a correct account, verified by affidavit, of your actual claim against the general contractor or subcontract, for work done or materials furnished;
    2. the actual claim against the general contractor or subcontractor for your work done or materials furnished; and
    3. the amount due.

Both notices must be either: a) served using Virginia’s service of process methods; or b) mailed by registered or certified mail and received by the owner or general contractor upon whom personal liability is sought to be imposed; with a return receipt showing delivery being “prima facie” (legal speak for being accepted as correct until proven otherwise) of receipt. While any “bona fide agreement” for deductions for failure or refusal of the general contractor to comply with his contract shall be binding on the claimant seeking personal liability, that is an affirmative defense to the 43-11 notice and must be proven by the owner.

Like mechanic’s lien defenses, more generally, however, the lower tier claim at the time of the second notice cannot exceed the amount for which the next higher tier is liable to the tier above. In other words, if no further payment is due to the general contractor from the owner, that effectively “cuts off” the owner’s liability to the claimant; and, similarly, if no further payment is due to the first tier subcontractor from the general contractor, that cuts off the liability to the subcontractor’s lower tier supplier or laborer. So, while not quite the equivalent of a “notice of claim of lien against funds” as some jurisdictions provide (like North Carolina) because of such defenses; the Virginia Code § 43-11 notice statute provides both practical, and legal, basis for lower tier laborer and supplier claims against owners and general contractors – – separate from Virginia’s mechanic’s lien processes.

For more information about this or other construction law matters, please contact the author or any of the other attorneys with the Vandeventer Black Construction and Government Contracts Practice Group.

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