Neil S. Talegaonkar, Esq. | ThompsonMcMullan | March 18, 2015
Some of you may recall the George and Ira Gershwin song, They Can’t Take That Away From Me made famous by Fred Astaire and Ginger Rogers in the film, Shall We Dance. A recent amendment to a mechanic’s lien statute will limit general contractors’ ability to take lien rights away from subcontractors. The amendment will nullify provisions in contracts requiring subcontractors to waive their lien right, among other rights, prior to the subcontractor providing the labor, services or materials.
Often times, even before a project gets started, a general contractor or an upper tier subcontractor inserts language into a contract requiring a lower tier subcontractor or materialman to waive its right to file a mechanic’s lien or assert other claims against a property on which services or materials will be provided. Such a lien waiver deprives the lower tier subcontractor or materialman of a powerful weapon should payment for the work or materials provided later become an issue. The General Assembly recently passed Senate Bill 891 making such lien waivers void.
Assuming Governor McAuliffe signs Senate Bill 891 into law, effective July 1, 2015, Virginia Code Section 43-3 will be amended as follows:
Any right to file or enforce any mechanics’ lien granted hereunder may be waived in whole or in part at any time by any person entitled to such lien, except that a subcontractor, lower-tier subcontractor, or material supplier may not waive or diminish his lien rights, the right to assert payment bond claims, or the right to assert claims for demonstrated additional costs in a contract in advance of furnishing any labor, services, or materials. A provision that waives or diminishes a subcontractor’s, lower-tier subcontractor’s, or material supplier’s lien rights, right to assert payment bond claims, or right to assert claims for demonstrated additional costs in a contract executed prior to providing any labor, services, or materials is null and void.
This is good news for subcontractors and materialmen. Construction contracts and mechanic’s liens are a tricky business. If you need to file a memorandum of mechanic’s lien or need to have your contract reviewed, you should contact counsel experienced in this area.