A special thanks to Christopher Hill and his recommended Construction Law Musings blog, for letting me post for a record 5th time as part of his Guest Post Friday series. I love his construction law blog. He’s been blogging about construction law matters in Virginia for a few years, and he brings an unique voice to the construction law conversation out there on the Internets.

While I’ve focused on immigration issues my past submissions, this time, I wrote an article outlining the life of a mechanics lien claim: The Life Of A Mechanics Lien Claim: Preserve, Perfect, Enforce.

I really like how this post turned out, as it gives a big picture overview to the entire mechanic lien process. Here on this blog, I sometimes get bogged down on the nuances in mechanic lien law, addressing the little things that differ state-to-state.

It’s important to step back sometimes and take a view from above apporach to the liens laws, because while they vary drastically from state to state, there are a lot of underlying principles that are consistent. Understanding these principles can take companies a long way.

In any event, thanks to Chris, and I recommend heading his way to read the article.

Chris explains the issue in the case well:

[T]he Court considered a provision of a contract between the TWP Enterprises, a supplier of materials to the construction project, and the builder for the defendant. The provision between the supplier and builder essentially stated that until such time as TWP’s materials were paid for in full, TWP kept title to them…

The owners argued – essentially – that since the supplier maintained ownership interest in the materials, they had – in effect – waived their right to lien the project, because they couldn’t lien their own materials.

As an attorney, this argument seems dubious at best; one that doesn’t pass the “smell test.”  With that said, it does have a logical foundation and I suppose I understand how the attorneys got this concept.

The Virginia trial court gave four or five different reasons in rejecting the argument and holding that the mechanic lien was indeed valid. One of the enumerated reasons that caught my attention was one directed to Virginia’s public policy, summarized by Chris in his blog post as follows: “To enforce the provision described above as argued by the owners would create and implied waiver of lien rights.”

In other words, this argument would allow the suppliers – in a round-about way – to waive their lien rights before performing work. And this, as we previously discussed on the Construction Lien Blog – isn’t allowed in most states.

We’re pleased to welcome

I want to thank Scott for, once again, letting me guest post here at the Construction and Mechanic’s Lien blog.

I have discussed the picky nature of Virginia mechanic’s liens often over at my Construction Law Musings blog. Not only are the requirements and details strictly enforced, but the Virginia General Assembly seems to feel the need to tweak them in each of its sessions.

The latest change involves the use of a mechanic’s lien agent on residential projects. Beginning at the start of this month, July 1, 2010, a contractor can no longer depend on the failure of the owner to list a mechanic’s lien agent on the posted building permit. The new statute requires that a contractor go beyond merely reading the building permit and make a reasonable inquiry with the local building authority to determine the identity of the mechanic’s lien agent.

Another key change to this provision allows an owner to amend a building permit to add a mechanic’s lien agent at a date sometime after the beginning of construction. Based on this change to the statute, contractors must be constantly vigilant to any lien agent changes to assure that their required 30 day notices to the agent are properly filed because the owner is likely to bring a defense of failure to give notice by a contractor or subcontractor (regardless of if the trade is finished or not) should such notices remain un-filed or un-amended.

Aside from the obvious need to keep abreast of the changes to the mechanic’s lien statutes in Virginia, contractors and other construction professionals must also update their long standing policies for notices on residential projects. Consultation with an experienced construction attorney is key in assuring that you are both up to speed on legislative and judicial changes and that your business procedures take such changes into account.

Before the lien page, Musings was already a great source of  information on Virginia lien laws.  The new page really organizes that data.

Here are a few of the articles you can find within the new section:

A Lien By Any Other Name Can Sound Just As Sweet (written by yours truly)

Q:  What can you lien?  A: What did you bring to the project?

Contracts, Liens and Notices

Enjoy.

(P.S. If you’re looking for information on Virginia’s lien scheme right here at the Construction Lien Blog, you can just check out our Virginia tag.    It even includes a post by Chris Hill).

In researching liens in the Commonwealth of Virginia, I ran across a question that should be on the minds of construction professionals in Virginia, particularly suppliers of materials.  The question is simply “On an open account (based on a credit agreement or other arrangement), is each delivery to a particular contractor its own “work” such that the 90 day clock runs from the completion of each delivery, or do all deliveries to a particular project constitute the “work” on that project such that the 90 day clock only runs from the last delivery to the job site?” (How’s that for simple!)

The answer to this question is (drum roll please!)- “It depends.” (I know, you are shocked at such a “lawyerly” answer.)

The Virginia Supreme Court weighed in on this question in United Savings Association of Texas, F. S. B. v. Jim Carpenter Company, Record No. 951470 (2006).  The Jim Carpenter case involved three different cases of liens that were filed by material men pursuant to various forms of open account contracts.  You can read the case to see the particular facts of the case but in essence the owners/general contractors on the project argued that the material men could not lien for any materials delivered to a particular project outside of the 90 day lien window and the material men argued that all of the materials were delivered to the same projects and therefore all constituted one continuous contract.

The Virginia Supreme Court held that the intent of the parties controls.  On the one hand, general deliveries to a contractor for general use (i. e. warehousing for use at some time in the future) each constitute a separate contract, each with its own 90 day clock.  On the other, if the material deliveries upon which the lien is based are all delivered for the benefit of a particular project then they all constitute one continuous contract and the 90 day clock does not start to run until the last delivery is completed.

What do you, as a construction professional, take from this case?  Be careful with your open accounts.  Make sure that when delivering materials to a job site based upon an open account you are exceedingly clear with your purchase order or takeoff language that certain materials are to be delivered to a certain project.  Failure to do so may lead a court to decide that the materials were a general delivery and cut off much or all of your recovery.

As with everything else to do with the picky issues with mechanic’s liens, all of the other requirements (150 day look back, notice, etc.) apply and good legal assistance is a must.

If you are interested in more thoughts on Virginia construction law, please check out my Construction Law Musings blog and join the conversation.