Amendment to Virginia Mechanic’s Lien Code Approved
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. This law firm did work with lobbyists and industry associations to get a revision that an inaccuracy in the license information on the lien memorandum does not invalidate the mechanic's lien if the lien claimant can otherwise be reasonably identified in the records of the Board of Contractors.
To see the text of the bill as currently drafted and adopted by both the House and the Senate, go to http://lis.virginia.gov/cgi-bin/legp604.exe?131+ful+HB1913S1
To see the complete Legislative History, go to http://lis.virginia.gov/cgi-bin/legp604.exe?131+sum+HB1913
This will make it somewhat more difficult to preserve lien rights, since it provides one more detail for lien claimants and their lawyers. Hopefully the inadvertent inaccuracy amendment will prevent valid claimants from losing rights. The licensing statutes have always been important to protect the public from dishonest or incompetent contractors. This amendment to the lien code will help police unlicensed contractors and promote compliance with the licensing statutes. This certainly was a major objective of the new law. It is interesting that contractors' associations, including the Association of General Contractors (AGC), supported this amendment. Such associations have a legitimate interest in promoting compliance with the licensing statutes, although it is probably also significant that this amendment will help protect licensed contractors from competition from unlicensed contractors. Unlicensed contractors from out of state have always been a problem and this amendment will also help control that abuse.
The Virginia Code has always provided forms for mechanic's lien claimants. These lien forms and the attached affidavit have also been changed to include licensing information or a statement under oath that no license was required.
You should also notice that a Mechanic's Lien Agent Notice must also include the same licensing information. This is the notice that all contractors and suppliers must send within thirty (30) days after they begin work on residential projects in Virginia if they wish to have mechanic's lien rights on the project. For more information on the Virginia Mechanic's Lien Agent Statute, go to http://www.fullertonlaw.com/construction-law-survival-manual/mechanics-liens-in-virginia.html#p.
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. I would predict, however, that this amendment to the mechanic's lien code will result in more disputes and litigation about whether a license was required for certain types of activities in the construction industry. There have always been some "gray areas" in the licensing statute that were rarely tested for material suppliers and some types of service providers. Owners and title insurance companies defending mechanic's liens now have a stronger incentive to look closely at the licensing statute and argue that licensure was required.
This licensing amendment passed by wide margins after the addition of the inadvertent inaccuracy amendment, passing the Senate 38-2 and the House 100-0. The bill now goes to the governor for signature. The amendment will probably be effective on July 1, 2013.
Source: James D. Fullerton, Fullerton & Knowles, P.C., www.fullertonlaw.com