• Virginia is an UNPAID BALANCE lien state.
  
  • A General Contractor’s liability to a sub-tier subcontractor or supplier is limited to the amount the General Contractor owes his subcontractor at the time of filing. It is important that suppliers and subs provide notice to the owner and prime sooner rather than later before funds are exhausted.
• Suppliers to suppliers have lien rights in VA.
• The Section 43-11 Notice— Addresses how an owner or general contractor could be made personally liable to subcontractor, laborer or materialman.   Section 43-11 of the Code of Virginia has been largely ignored and underutilized.   Two notices are required to perfect the section 43-11 notice requirements.  
  

  1.    MLBS Preliminary Notice:   Any  subcontractor or person furnishing labor or material to the general contractor or subcontractor, may give a preliminary notice in writing to the owner or his agent or the general contractor, stating the nature and character of his contract and the probable amount of his claim.

  2.    Attorney Notice:   Additionally, if such subcontractor, or person furnishing labor or material shall at any time after the work is done or material furnished by him and before the expiration of thirty days from the time such building or structure is completed or the work thereon otherwise terminated furnish the owner thereof or his agent and also the general contractor, or the general contractor alone in case he is the only one notified, with a second notice stating a correct account, verified by affidavit, of his actual claim against the general contractor or subcontractor, for work done or materials furnished and of the amount due, then the owner, or the general contractor, if he alone was notified, shall be personally liable to the claimant for the actual amount due to the subcontractor or persons furnishing labor or material by the general contractor or subcontractor, provided the same does not exceed the sum in which the owner is indebted to the general contractor at the time the second notice is given or may thereafter become indebted by virtue of his contract with the general contractor, or in case the general contractor alone is notified the sum in which he is indebted to the subcontractor at the time the second notice is given or may thereafter become indebted by virtue of his contract with the general contractor.

  • A claimant may still have Section 43-11 rights, even if the claimant has waived lien rights.  MLBS can have a local attorney review your claim.

Notice Speed Bumps

• First and second tier subcontractors (suppliers) must give notice to the Owner and all parties above them with whom they are not in privity.
  
  • Residential: Virginia broadly defines one - or two-family residential dwelling. 
    
    • The 30 day residential notice should be served on all one - or two-family residential dwellings regardless of ownership during construction.
    • Notice to Mechanic’s Lien Agent: Section 43-4.01 requires all persons entitled to claim a mechanic's lien with respect to work performed on or materials supplied to a one- or two- family residential dwelling unit to notify the mechanic's lien agent, if one has been so designated on the building permit by the real estate owner. Any contractor filing a lien for site development improvements under Virginia Code § 43-3(B) (streets, storm or sanitary sewer, waterlines or roads) is expressly excluded from the MLA statute and does not need to give this notice
    • The notice must be furnished to the mechanic’s lien agent. There is no particular form required for a mechanic's lien agent notice. By statute, however, the notice must contain:
    1. 1. The name, mailing address and telephone number of the person (or company) sending the notice.
       2. The building permit number.
       3. A description of the property as shown on the building permit.
       4. A statement that the person filing such notice seeks payment for labor performed or material furnished
       5. Contractor, Subcontractor or sub-subcontractor's license number, date issued and expiration date.
          Source: James D. Fullerton, Fullerton & Knowles, P.C.

§ The building permit contains all outside information necessary to send an MLA notice. All other information necessary for the notice is obtained from the contractor's own records. Section 43-4.01(B) states that "an inaccuracy in the Notice as to the description of the property shall not bar a person from claiming a lien under this title . . . if the property can otherwise be reasonably identified from the description

(a) within 30 days of the first date that the person performs labor or furnishes materials to or for the building or structure or

(b) within 30 days from the date the permit is issued, if such labor or materials are first performed or furnished prior to the issuance of the permit.

• • • A lien claimant is not free to disregard the notification requirement with regard to the mechanic’s lien agent simply because a building permit is not posted on the residential dwelling unit at the time he first performs labor or furnishes materials.
    • Revisions to Virginia lien laws enacted in 2010 eliminated the requirement that an entity designated by an owner as a mechanic's lien agent (MLA) provide their consent in writing. Now they can consent verbally as well as in writing. Furthermore the changes provided that owners no longer need to provide the MLA's name, address and telephone number on the building permit when it's issued, and can instead add or amend the building permit with this information or switch MLAs whenever they please.

Mechanic’s Lien Speed Bumps

• The Memorandum of Mechanic’s Lien may only include sums due for labor and materials furnished within 150 days prior to the last day on which the claimant performed work or furnished material to the job prior to the filing of the lien. A violation of this 150 day limitation period will render the entire Mechanic’s Lien unenforceable.

HOUSE BILL NO. 1913
The Virginia General Assembly has adopted an amendment to the Mechanic's Lien Code providing that an unlicensed contractor may not claim a mechanic's lien if a valid contractor's license or certificate was required by law for the work performed. The bill also requires that the lien claimant place licensing information on the face of the lien memorandum, including the license number, the date that the license was issued, and the date it will expire, or certify in the affidavit that a license was not required by law for the type of work performed. It does seem that material suppliers or other potential lien claimants that do not need to be licensed will not lose lien rights under this amendment. Source: James D. Fullerton, Fullerton & Knowles, P.C.

• For transportation-related projects authorized under § 33.1-12 and partially or wholly funded by the Commonwealth, such bond shall be in a form and amount satisfactory to the public body.
•  7/1/11: Virginia Public Procurement Act; bid, performance, and payment bonds.  Raises the minimum contract amount required for bid, performance, or payment bonds from $100,000 to $500,000 for nontransportation-related construction projects. The bill provides that for nontransportation-related construction projects between $100,000 and $500,000 where the bond requirements are waived, the prospective contractors must be prequalified. The amount ($250,000) for transportation-related projects partially or wholly funded by the Commonwealth, however, remains the same. 
• Each of the bonds shall be filed with the public body that awarded the contract, or a designated office or official thereof.
• In lieu of a bid, payment, or performance bond, a bidder may furnish a certified check or cash escrow in the face amount required for the bond.
• Any waiver of the right to sue on the payment bond required by this section shall be void unless it is in writing, signed by the person whose right is waived, and executed after such person has performed labor or furnished material in accordance with the contract documents.