Imagine that your family bought a suburban home in Charlottesville last year. After moving in, you decided to renovate the garage. You hired a contractor to replace the flooring, roof, and doors, for a lump-sum of $5,000. Two months later, the work was complete. However, the contractor says the job cost more than he anticipated—a whole $15,000—and demands that you pay a bill for another $10,000. You refuse. Shortly thereafter, you open your mail to find notice of a mechanic’s lien for $10,000. What is this document, and what can you do about it under Virginia law?
You may be surprised when you receive a mechanic’s lien in the mail. Most Virginia homeowners have likely never seen or heard of this document. Unlike lawsuits, liens are relatively obscure and do not garner much media attention. What exactly is this type of lien, and what does it mean for you?
A lien is a document that gets publicly filed with a Virginia county clerk’s office. A lien becomes a cloud on a homeowner’s title, meaning that the title is subject to the contractor’s stated financial interest in it.
Practically speaking, this means that a contractor or subcontractor filed the document in the clerk’s office of the county where your home is located. If the contractor puts a lien on your home in the amount of $10,000, anyone who buys your property would buy it subject to owing the contractor that $10,000. This will make it difficult for you to sell the property (or to refinance it through a bank or other institutional lender), since no one would want to take property that's subject to this claim. Contractors therefore use liens as a means of incentivizing property owners like you to settle with them.
You may wonder what a lien looks like, if your contractor has threatened to file one. A mechanic’s lien is a short document, generally just a few pages long. A model form for a mechanic’s lien is freely available on the Virginia Court system’s website.
Basically, the form will list your name and contact information, the contractor’s name and contact information, the name of any general contractor involved (if a subcontractor or supplier is filing the lien), the amount of money allegedly due to the lienor, and a description of the lienor’s labor or materials provided to the property.
Imagine that you thought someone owed you money. You probably would not sue immediately, but would instead try to get the payment without resorting to lawyers and courts. Most contractors will approach problems in the same way. Rather than simply filing a lien on your property out of nowhere, they ordinarily start by making repeated requests for payment.
Only if these requests are ignored or rejected will they be provoked into filing a lien or a lawsuit. In other words, when a payment dispute arises, think about the big picture; the best way to fight a lien filing is to avoid the lien altogether.
Simply put, this requires you to negotiate with a contractor prior to the filing. If your contractor asserts that he or she is owed an extra sum of money, do not just ignore the phone calls or invoices. This might be viewed as a sign of disrespect, as well as a sign that you have no intention of paying a dime. While you might think that this tough stance will convince your contractor to simply go away, the contractor is just as likely to dig in his or her heels and cause legal trouble for you, either through a lien or a lawsuit (or both).
You and the contractor may have a good faith disagreement about whether certain work was part of his contract, or about the quality of that work. Rather than ignoring the issue, have a frank discussion about it, or consider going to mediation.
In mediation, a third-party neutral (often an attorney or individual with experience in the construction industry) can help you and your Virginia contractor negotiate a fair settlement. In both negotiation and mediation, you should be open to clever settlement strategies. Rather than paying a lump sum, perhaps payments could be made over time. Rather than a monetary settlement, maybe you could offer the contractor a public endorsement or reference. Rather than fighting in court, you could offer the contractor discounted payment in exchange for a limited scope of ongoing work. The creative possibilities are endless.
In short, although Virginia law gives you remedies with which to fight a lien once it is filed, you are likely to save both time and money if you find a way to settle the payment dispute with the contractor. This does not mean you need to give into all of the contractor’s demands, but it does mean that you should keep in mind the costs of legal action to fight a lien. It is likely in both your and the contractor’s interests for the payment dispute to be resolved quickly, without the need for attorneys.
If a lien is filed on your Virginia home, you may find it useful to actually understand the Commonwealth’s laws governing liens. Liens are controlled by Virginia Code § 43-1 et seq. You can read the full law online, although you will find that the legislative language is somewhat dense.
Like with most states’ lien statutes, Virginia’s lien law contains many rules and exceptions, depending on the type of property involved and the work performed. Nevertheless, there are some broader important concepts that may be helpful for you to understand.
First, you should know that Virginia permits a wide range of different types of entities to file liens on private property. As the law specifies, “[a]ll persons performing labor or furnishing materials of the value of $150 or more, including the reasonable rental or use value of equipment, for the construction, removal, repair or improvement of any building or structure permanently annexed to the freehold, and all persons performing any labor or furnishing materials” are entitled to file a lien. This includes contractors, subcontractors, material providers, and other service providers.
Virginia law also limits the money that lienors (the contractors filing the lien) can seek. Indeed, liens must follow a “look back” period for the monies for which a lienor can seek compensation. The lien can't include “sums due for labor or materials furnished more than 150 days prior to the last day on which labor was performed or material furnished to the job preceding the filing of such memorandum.” Put differently, lienors are largely precluded from seeking payment that they were owed more than 150 days before the lien was filed.
This language is a bit dense, but essentially, anyone who has an agreement to improve Virginia property with you directly, or an agreement with another contractor that has such an agreement with you, can file a lien if he or she is left unpaid. But that right to file a lien is time-limited by this “look back” period. This commonly includes contractors, subcontractors, and material suppliers.
As discussed above, a mechanic’s lien can create problems for Virginia homeowners. There are several strategies to get the lien removed. The first, as mentioned, is to negotiate a resolution with your contractor. There are a couple other options.
A second option is to obtain what is known as a “lien bond” through a surety company. The bond essentially guarantees payment to the contractor in the amount of the lien, if the contractor is successful on his or her legal claims, but also removes the lien from your property record.
Third, you can petition a court (specifically, the Virginia Circuit Court in your county) to remove the lien. Your grounds for removing the lien could include that the contractor never did the work that the lien claims, or that the work was already compensated.
You can also attack legal deficiencies in the lien. One of the single most common legal deficiencies in a Virginia lien is that it is filed too late. There are strict deadlines for when a Virginia lienor can file its lien on property. The lien is required to be filed “at any time after the work is commenced or material furnished, but not later than 90 days from the last day of the month in which he last performs labor or furnishes material, and in no event later than 90 days from the time such building, structure, or railroad is completed, or the work thereon otherwise terminated.”
In other words, lienors normally have 90 days from the date that they last provided labor or materials to a project to file their lien. In many cases, contractors, subcontractors, and suppliers blow past this deadline without realizing it. Consequently, you should be conscious of the contractor’s “last date.” If the lien filing is untimely, you can file a petition with your county’s Circuit Court for the lien to be stricken from the property docket.
Another important deadline might help you to strike a lien from your property docket: Under Virginia Code § 43-17, “No suit to enforce any lien… shall be brought after six months from the time when the memorandum of lien was recorded or after sixty days from the time the building, structure or railroad was completed or the work thereon otherwise terminated, whichever time shall last occur….” In other words, once the lien is filed, your contractor must file a lawsuit within six months to enforce it. If the contractor fails to do so, you can ask for the lien to be stricken for untimeliness.
Mechanic’s liens are unfamiliar documents to most Virginia homeowners. After all, it is not a daily occurrence to have a significant dispute with a home improvement contractor. However, you should remain calm in the event that you are served with a lien. Remember, very few contractors are excited about the idea of prolonged, expensive litigation.
To the contrary, most would prefer to settle the dispute quickly and move to other construction projects. But if there is no hope of coming to a reasonable middle ground between your position and the contractor’s, Virginia law gives you a number of legal tools with which to remove the lien from your property record.