Construction Law Blog

Virginia mechanic’s liens can be tricky, full of pitfalls, landmines, and traps for the unwary. One of those traps is the sometimes confusing and often misunderstood “150-Day Rule.” And a recent mechanic’s lien case from the City of Norfolk addresses not only the 150-Day Rule, but also the difference between (i) a “mere inaccuracy” in the memorandum of lien (which will not invalidate the lien), and (ii) a fatal inclusion of dollar amounts in the lien which will invalidate the lien and render it completely unenforceable. The Norfolk case is Premier Restorations v. Barnes, and the court’s opinion was published on September 22, 2023.

In Premier Restorations, the contractor, Premier, performed fire damage repair work at the property of the owner, Barnes. Disputes arose between contractor and owner (the contractor claimed significant delays caused by the COVID-19 pandemic) and in June, 2022, the contractor recorded a mechanic’s lien memorandum against the owner’s property in the amount of $109,185. In August, 2023, the Norfolk court conducted a trial on the lien claim. Surprisingly, at trial the contractor presented no evidence regarding whether the lien complied with Virginia’s 150-Day Rule. And although the owner did not present any affirmative evidence of its own that the contractor’s lien violated the 150-Day Rule, the owner nonetheless moved to dismiss and invalidate the lien on the basis of the contractor’s lack of evidence of compliance with the Rule.

In its September, 2023 opinion, the Norfolk court addressed the following issues: (i) a clear explanation of the 150-Day Rule; (ii) what constitutes a correctable “mere inaccuracy” in the lien memorandum versus an uncorrectable and fatal inclusion of improper amounts in the dollar amount being claimed; and (iii) who has the burden of proving compliance with Virginia mechanic’s lien requirements, including compliance with the 150-Day Rule.

The Norfolk court started with an explanation of the 150-Day Rule. In Virginia, a mechanic’s lien MAY NOT include dollar amounts for work performed or materials supplied more than 150 days before the date on which the lien claimant last performed work on the job (except for retainage amounts up to 10% of the contract price). (NOTE:  The 150 days is measured back in time from the lien claimant’s last day of work on the job – NOT from the date that the mechanic’s lien is recorded. Some lien claimants, and their lawyers, often confuse these two dates and apply the Rule incorrectly.)

The court then noted that, despite the requirements of the 150-Day Rule, Virginia law also states that an “inaccuracy” in the lien memorandum will not invalidate the lien if the mechanic’s lien otherwise “conforms substantially” with the requirements of Virginia law. The court then used two separate Virginia Supreme Court cases to illustrate the difference between a “mere inaccuracy” in a lien claimant’s 150-Day calculation, and a fatal mistake that invalidates the entire lien claim.

The Norfolk court first pointed to the 1999 Virginia Supreme Court case Carolina Builders v. Cenit as an example of a fatal violation of the 150-Day Rule that invalidated a lien. In Carolina Builders, the lien claimant included dollar amounts for actual construction materials and actual labor that had been performed more than 150 days prior to the last day of work. In response, the defendant presenting pre-trial evidence of the violation, and the Virginia Supreme Court held that the lien was invalid and unenforceable, noting that the requirements of the mechanic’s lien statute must be strictly construed.

By way of contrast, in the 2002 case of Reliable Constructors v. CFJ Properties, the Supreme Court held that a mechanic’s lien was NOT invalid, even though the lien claimant had included in its mechanic’s lien a $250 fine that had been levied more than 150 days before its last day of work.

What was the difference in these two cases? Well, the Supreme Court finally reconciled the difference in the 2009 case of Smith Mountain Building Supply. The $250 fine in Reliable Constructors, the Supreme Court reasoned, was not for actual construction materials or labor – just an improperly levied fine -- while the violation of the 150-Day Rule in Carolina Builders was for actual labor performed and actual materials provided. Thus, the inclusion of the $250 fine was a “mere inaccuracy” and not fatal to the lien while the inclusion of dollars for actual work and materials outside of the 150 days rendered the lien invalid and unenforceable.

Finally, the Norfolk court in the Premier Restorations case noted that the Virginia Supreme Court has never ruled on the issue whether a lien claimant must affirmatively prove compliance with the 150-Day Rule, or whether the lien is presumed to be valid when proof of noncompliance is not offered by an owner. The Norfolk court ruled that, when the owner does not offer proof of non-compliance, then the lien must be presumed to be valid. And as of the date of this post, this ruling appears to not have been appealed to a higher court.

TAKEAWAYS

1. The law in Virginia is not completely settled, but we believe that it is risky for a lien claimant to assume that a court will presume its lien to be valid and comply with all Virginia statutory requirements, including the 150-Day Rule. You should plan to have a knowledgeable witness testify as to when the work that is the subject of the lien claim was performed.
2. Contractors should keep careful accounting records of when all work was performed in order to be able to present evidence at trial that no amounts being claimed relate to work performed or materials supplied prior to 150 days before the contractor’s last day of work.
3. Every penny counts. Inclusion of even just a few dollars that violate the 150-Day Rule may invalidate your ENTIRE lien claim. If improper amounts that are not a “mere inaccuracy” are included in your mechanic’s lien, even just a few dollars, courts will not correct your lien for you by excluding the improper amounts and awarding the balance. Your entire lien claim may be at risk.

Your Hirschler Construction Team stands ready to discuss any of your thoughts or questions about any of this complicated area of the law. Just be in touch with any of us or submit a question through our blog transfer portal.