Virginia
Construction Lending State Compliance Library
State statute reference
Last updated May 22, 2023
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Virginia Construction Lien Law
Lien Law Overview
Virginia’s Mechanics and Materialmans Lien Law gives persons performing labor for $150 or more to construct, remove, repair, or improve any building, permanent structure, or land, the right to file a lien on that building, the permanent structure, and as much of the land as is necessary for the convenient use and enjoyment of such building or permanent structure. See Va. Code 43-3.
Lien Waivers
Lien Waiver Summary
Lien waivers are generally allowed, but there are no statutory lien waiver forms in Virginia. Under Va. Code § 43-3, any provision of a contract that attempts to prospectively waive or diminish a contractor’s or material supplier’s lien rights prior to providing any labor, services, or materials is null and void. Meaning, that waiving lien rights in a contract is not permitted in Virginia.
Any person who knowingly presents a waiver of lien form to an owner, his agent, contractor, lender, or title company for the purpose of obtaining funds or title insurance and who forges or signs without authority the name of any person listed thereon shall be guilty of a felony and punished as provided in § 18.2-172.
Statutory Form
Not Required
Notary
Not Required
Electronic Signature
Acceptable
Are title companies required by law to manage construction loan disbursements?
No, but title companies are insurance companies who may require -in exchange for insurance coverage – some level of control over how loan proceeds are disbursed. If they do, the lender either must comply with the title company’s demands or risk not having coverage for the loan (or try another title company, but they tend to share best practices by location/region).
Can a mechanics lien have priority over a pre-existing mortgage in Virginia?
Virginia mechanics liens for new construction have “super-priority” status, which means that they can have priority over pre-existing mortgages under certain circumstances.
For new residential construction loans, if a mechanics lien is recorded on property on which a deed of trust was recorded before work began on the building or a structure was placed on the property, the lender only has priority of satisfaction to the extent of the estimated value of the property without the improvement. In other words, a lender cannot achieve priority over mechanic’s liens when the loan proceeds are used for the construction of the building. The mortgage is a first lien against the land and a second lien against the building. Mechanics liens are a first lien against the building and a second lien on the rest of the land.
For renovation loans, a mortgage against the land and any improvements that are recorded before construction begins take priority over a later filed mechanics lien for the repair or improvement of such land and any existing or structure of record before the commencement of the improvements or repairs. See Va. Code § 43-21.
Under Virginia law, priorities between mechanics lien claimants and bona fide purchasers for value are dependent on whether the project is new construction or a renovation of an existing building. Regarding new constructions, if there is a lien on the land before the mechanic begins work or furnishes materials, the lien on the land does not operate on the building until after the mechanics lien is satisfied. Regarding renovations, a mechanics lien filed for the repair or improvement of any existing building is subordinate to any encumbrance against the land and building or structure of record before the commencement of the improvements or repairs. See Va. Code § 43-21.
Notices
Notice of Commencement (or similar like event)
Mechanics Lien Agent
Virginia does not have a Notice of Commencement, however when constructing a 1 to 2-family dwelling unit, the naming of a mechanics lien agent is required before mechanics lien rights may be claimed. See Va. Code 43-4.01. Under Va. Code § 43-4.01, mechanics lien agents are mandatory for one- or two-family residential construction projects.
In addition, any person entitled to claim a mechanics lien for such projects may notify the mechanics lien agent that they seek payment for labor performed or material furnished by registered or certified mail or by physical delivery. See Va. Code §43-4.01(A). While not stated as a mandatory requirement, and not required by claimants claiming lien rights per Va. Code § 43- 3(B), failure to provide notice has preclusive impact by limiting the lien claim to the labor performed or materials furnished on or after the date notice is given. Additionally, as with other notice requirements under the Act, Va. Code § 43-4.01’s notice may not be constructively imputed to the mechanics lien agent, regardless of actual knowledge, and defective notice is ineffective. See Parish v. Chowdhury, 59 Va. Cir. 239 (Cir. Ct. Winchester, July 9, 2002).
The building permit for any one- or two-family residential dwelling unit issued pursuant to the Uniform Statewide Building Code shall be conspicuously and continuously posted on the property for which the permit is issued until all work is completed on the property. The permit shall be posted on the property before any labor is performed or any material furnished on the property for which the building permit is issued. See Va. Code 43-4.01. Building permits for the construction of such dwelling units must include the name, mailing address, and telephone number of the project’s mechanic’s lien agent. The requirements for a designated mechanic’s lien agent are defined in Va. Code § 43-1 and include the agent (being either an individual or legal entity) having consented to do so after formal designation by the owner and the agent being a licensed attorney, title company, or financial Institution.
Preliminary Lien Notifications
When constructing a 1 to 2 family dwelling unit, the naming of a mechanics lien agent is required before mechanics lien rights may be claimed. See Va. Code 43-4.01. Under Va. Code § 43-4.01, mechanics lien agents are mandatory for one- or two-family residential construction projects. Building permits for the construction of such dwelling units must include the name, mailing address, and telephone number of the project’s mechanics lien agent. The requirements for a designated mechanics lien agent are defined in Va. Code § 43-1 and include the agent (being either an individual or legal entity) having consented to do so after formal designation by the owner and the agent being a licensed attorney, title company, or financial institution.
In addition, any person entitled to claim a mechanics lien for such projects may notify the mechanics lien agent that they seek payment for labor performed or material furnished by registered or certified mail or by physical delivery. See Va. Code § 43-4.01(A). While not stated as a mandatory requirement, and not required by claimants claiming lien rights per Va. Code § 43-3(B), failure to provide notice has preclusive impact by limiting the lien claim to the labor performed or materials furnished on or after the date notice is given. Additionally, as with other notice requirements under the Act, Va. Code § 43-4.01’s notice may not be constructively imputed to the mechanics lien agent, regardless of actual knowledge, and defective notice is ineffective.
Notice of Completion
Not applicable.
Title
Virginia uses ALTA title commitments that allow for the Construction Loan Update Endorsement, which is used when the lender requests endorsements as additional disbursements are made. It gives coverage up to the new outstanding mortgage balance and shows whether any other instruments have been filed and recorded since the last title update. The endorsement also ensures the priority of the insured mortgage over instruments that are not specifically listed in the endorsement. Since the title company has a stake in the disbursements, you may find that they exercise some due diligence relating to construction draws.
Contractor Licensing
The Virginia Board of Contractor’s licensing requirements are accessible at:
https://www.dpor.virginia.gov/Boards/Contractors
General Contractors
Under Va. Code § 54.1-1103, general contractors must be licensed by the Virginia Board for Contractors (Contractors Board). Contractors include any person, that for a fixed price, commission, fee, or percentage undertakes to bid upon, or accepts, or offers to accept, orders or contracts for performing, managing, or superintending in whole or in part, the construction, removal, repair or improvement of any building or structure permanently annexed to real property owned, controlled, or leased by him or another person or any other improvements to such real property. See Va. Code § 54.1-1100. General contractors also include joint ventures; however, joint ventures must ensure that either (1) each contracting party of the joint venture is licensed or (2) a license is obtained by the joint venture itself. See Va. Code §§ 54.1-1100, 54.1-1103.
Virginia has three licensure classifications:
(1) Class A – for contracts of $120,000 or more,
(2) Class B – for contracts of $10,000 or more but less than $120,000, and
(3) Class C – for contracts of no more than $10,000. See Va. Code § 54.1-1103.
Licensure classifications and specialties are governed by the Contractors Board regulations, as well as other administrative aspects of licensure, under Chapter 22, Board for Contractors Regulations, 18 Va. Admin. Code §§ 50-22-10 et seq.
Subcontractors
Virginia’s contracting requirements do not distinguish between contractors or subcontractors.
Class A licensees that cannot provide proof of financial responsibility can satisfy that requirement by obtaining a $50k surety bond. Proof of current bond must come from a corporate surety licensed to do business in the Commonwealth and approved by the Attorney General and must be filed with the Department of Professional and Occupational Regulation (DPOR). See Virginia Code §§ 54.1-1106(C) and 1108(C).
The surety bond form is accessible at:
https://www.dpor.virginia.gov/sites/default/files/boards/Contractors/A501-27BOND_pdf.pdf
Virginia’s licensee lookup tool is accessible at: https://www.dpor.virginia.gov/LicenseLookup
Have Questions?
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