I hope you enjoyed my recent webinar on payment techniques for contractors in DC, Maryland, and Virginia. If you missed it, you can access the recording here. Below are some of the highlights:
Traditional payment techniques for contractors include asking for payment in writing with a list of your claims. Such letters can serve as important documentation to establish that your claim was asserted and that you complied with contractual notice provisions. If you later end up in court, it can show that you attempted to work things out.
For additional leverage, mechanic’s liens are a great tool to increase bargaining power during negotiations on private jobs. For federal and state jobs, you must file a bond claim (mechanic’s liens generally are not available on such jobs). Washington, DC and Maryland also have prompt pay statutes that can provide additional leverage on private jobs because they allow the contractor to recover attorney’s fees and interest on unpaid amounts.
When Do I Call My Attorney?
Answer: As soon as a potential dispute may exist.
Why? Deadlines for mechanic’s liens and bond claims are frequently very short, and if you miss any single deadline, you can lose your lien or bond rights. These deadlines vary by state, and most states require you to meet multiple deadlines. Having legal counsel on hand can also ensure that you are advised of a strategy to maximize your recovery and hopefully avoid litigation.
DC Lien Characteristics
- Only general contractors and subcontractors can get a lien.
- An Owner has defense of payment.
- A Contractor has 90 days from completion/termination of work to file a notice of lien with land records office and serve it on the property owner.
- A Contractor has 180 days from filing notice of lien to file lien enforcement lawsuit.
Maryland Lien Characteristics
- Subcontractors and suppliers have 120 days after the last day of work to serve the statutory notice to the project owner.
- General Contractors (who have a contract with the owner) do not have to provide notice.
- All contractors have 180 days from the last day of work to file a lawsuit to establish and enforce a mechanic’s lien.
- A liened project must improve the value of the property by 15% for a property owner or 25% for a tenant.
- Owner does not have defense of payment.
Virginia Lien Characteristics
- Virginia allows anyone in the contract chain of labor/materials to have lien rights.
- A Contractor has 90 days from the last day of the month in which it last performed labor or furnished material to file a Notice of Mechanic’s Lien in the land records office.
- A Notice of Lien must be filed within 90 days from date that the project is completed.
- A contractor must file a legal complaint in the circuit court of the county in which work was done within latter of (1) six months from the recordation of the notice of lien, or (2) 60 days from when work on the project was completed or terminated.
- Contractors can only lien for 150 consecutive days worth of work at a time.
Bonding Deadlines for DC, MD, and VA
- First-tier subcontractors (who have a contract with bond principal) do not have to provide notice of their bond claim.
- A Contractor has 90 days from last day of work to provide notice.
- Enforcement lawsuits must be filed within a year of last day of work.