Builders and Contractors Exchange
Weekly Bulletin: 01 Aug 2005
Subcontractors: The Real Deadline For Filing Mechanic's Liens
By: John Lockard
Under Virginia law, all persons performing labor or furnishing materials for the construction of a building (except for public projects) have the right to file a mechanic's lien to enforce their claims for payment. Pursuant to Virginia statute, all claimants must file their mechanic's liens with the court within 90 days of the last day of the last month in which they performed labor or furnished materials for the project, but in no case more than 90 days after the project was completed. For subcontractors, however, this deadline can be deceiving. There is no guarantee that a subcontractor will be able to recover the full amount of its claim even if it does file its lien within the time required by the Virginia statutes.
The mechanic's lien statutes provide owners with an additional defense to subcontractor claims. A subcontractor (or supplier that did not contract directly with the owner) may not collect more on its mechanic's lien than the amount which the owner owed the general contractor on the date the subcontractor gave the owner notice of its lien. The statute is designed to prevent the owner from paying twice for work performed on its project. Therefore, a subcontractor will not be able to recover any amounts on its lien if the owner pays the general contractor in full before the subcontractor files its lien, even if the lien is filed within 90 days of completion of the project. The subcontractor can only recover to the extent that the owner is retaining funds owed to the general contractor on the date of notice of the lien.
If the owner has paid the general contractor in full before the filing of the lien, the subcontractor's only recourse may be to sue the general contractor in court and hope the general contractor has assets to satisfy the judgment. Subcontractors and suppliers therefore should not wait until the last moment to file their mechanic's liens. Subcontractors and suppliers can also file multiple liens on the project as payments become due.
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This article is meant to bring awareness to this topic and is not intended to be used as legal advice.