MECHANIC’S LIEN BASICS.

Portions of Virginia Code Title 43, as amended, govern mechanic’s liens on private projects located in the Commonwealth of Virginia.  Mechanic’s liens provide a vehicle by which general contractors, subcontractors and certain suppliers can obtain a security interest in real property they improved, and ultimately compel the sale of the property in order to pay for the improvements they provided.  A mechanic’s lien is in derogation of the common law and the statutes dealing with the existence and perfection of a mechanic’s lien are strictly construed.^[1]  The basic steps and rules governing perfection of a mechanic’s lien are:

Requirements.

Memorandum of Mechanic’s Lien.

Filing a “memorandum of mechanic’s lien” is the first step a claimant must take to perfect its mechanic’s lien.  The memorandum is filed in the clerk’s office in the county or city in which the building, structure or railroad, or any part thereof is located.^[2]  The memorandum must, at a minimum, include (1) the name and address of the owner and claimant, (2) type of materials furnished by the claimant, (3) amount of the claim, (4) type of structure upon which the work was performed, (5) brief description of the property, (6) date from which interest is claimed, (7) a statement declaring the claimant’s intention to claim the benefit of the lien, (8) whether any part of the amount claimed is not yet due, and, the date or event upon which that sum will be due, (9) the name, if any, of the general contractor, and (10) the claimant’s Virginia contractor license number, date of issuance and date of expiration. ^[3]

The content of the memorandum will differ depending on whether the claimant is the general contractor or a subcontractor/supplier for the project.^[4]  Additionally, a lien claimant who is a general contractor must also file, along with the memorandum, a certification of mailing of a copy of the memorandum of lien on the owner of the property at the owner’s last known address.^[5]

Affidavit.

The memorandum must be verified by the oath of the claimant or the claimant’s authorized agent- an affidavit.  The affidavit is filed along with the filing of the memorandum and must be notarized.^[6]

Notice to Owner.

Any lien claimant that is not a general contractor must provide written notice to the owner or the owner’s agent of the amount and character of the lien claimant’s claim.^[7]

Enforcement.

A mechanic’s lien may be enforced in a court of equity by a Complaint filed in the county or city wherein the building, structure, or railroad, or some part thereof is situated, or wherein the owner, or if there be more than one, any of them, resides.^[8]  The lien claimant must file the Complaint within six (6) months of the filing date the memorandum, or after sixty days from the time the building, structure or railroad was completed or the work thereon otherwise terminated, whichever time shall last occur.^[9]  Along with the Complaint, the lien claimant must file an itemized statement of his account, showing the amount and character of the work done or materials furnished, the prices charged therefor, the payments made, if any, the balance due, and the time from which interest is claimed thereon, the correctness of which account shall be verified by the affidavit of himself, or his agent.^[10] Absent an “issue out of chancery,” the enforcement action is tried to a judge. In Virginia, the lien enforcement statutes are to be construed liberally while the perfection statutes are to be construed strictly.^[11]  Both perfection and enforcement must be timely for a claimant to recover under the mechanic’s lien statutes.^[12] An action to enforce a mechanic’s lien must name all necessary parties with an interest in the lien action, to include the owner of the property, trustees and beneficiaries of deeds of trust, and any other lien holder, to exclude subsequently filed mechanic’s liens.^[13] A claimant cannot amend its suit to add a necessary party after the 6-month limitation period has expired.^[14]

Ability to Waive and Limitations on Lien Rights.

Any right to file or enforce a mechanic’s lien may be waived in whole or in part at any time by any person entitled to such a lien, except that a general contractor, subcontractor, lower-tier subcontractor, or material supplier may not waive or diminish his lien rights in a contract in advance of furnishing any labor, services, or materials.^[15] A waiver of a mechanic’s lien must be express or, if it is implied, it must be established by clear and convincing evidence.^[16]  In Virginia, the general rule is that any agreement to waive or release a mechanic’s lien must be supported by consideration to be valid and binding.^[17]

The memorandum for mechanic’s lien shall be filed not later than 90 days from the last day of the month in which the claimant last performs labor or furnishes material, and in no event later than 90 days from the time the building, structure, or railroad is completed, or the work thereon otherwise terminated.^[18]  The memorandum cannot include sums due for labor or materials furnished more than 150 days prior to the last day on which labor was performed or material furnished to the job preceding the filing of such memorandum (unless those amounts are for retainage).^[19]  Including any amounts due for labor or materials provided prior to this 150-day period invalidates the entire lien.^[20] Claimants can file “any number of [lien] memoranda” to guard against violating the 150 day rule.^[21]

Note for Public Projects.

On a public project, there should be a payment bond in place for the protection of the subcontractors.^[22]  Public projects are not subject to mechanic’s liens.

PUBLIC PROJECT CLAIMS

State and Local Public Work

As stated, supra, contractors cannot file mechanics’ liens on public projects. Instead, prime contractors are typically required to provide payment bonds.[23] These bonds are intended to secure payment of subcontractors and second-tier subcontractors for performance of their work.

Notices and Enforcement

For subcontractors, bond claimants must file suit on the bond within one year of last supplying labor or material for the project but should not file sooner than 90 days to allow time for payment.[24] Second-tier subcontractors (sub-subcontractors) must file suit within 90 days from the date on which it last supplied labor or materials for which the claim is made.[25]

Claims to Public Funds[1]

Contractors and subcontractors cannot assert liens or claims against public funds. The Virginia Contractor Transaction Recovery Act provides relief to eligible consumers who have incurred losses through the improper or dishonest conduct of a licensed, residential contractor.[26] It does not provide relief for other public owners, commercial owners, licensed contractors, employees, or financial institutions, among others.[27]

Notices and Enforcement

This is a last resort after all other legal remedies have been exhausted. The consumer must first obtain a judgment from a court, attempt to collect from the contractor by conducting debtor interrogatories, take relevant legal action against existing assets, and only then can the consumer file a claim under this Act with the Department of Professional and Occupational Regulation. The claim must be filed within 12 months after the court judgment is final and must include documentation of prior legal action taken to try and collect. A single claim is limited to $20,000.

STATUTES OF LIMITATION AND REPOSE

Statutes of Limitation and Limitations on Applicable Statutes.

The Date the Limitation Period Begins.

The limitation period begins to run when the cause of action accrues.^[28]  In a personal injury or property damage action, the cause accrues at the time of injury.[29] For breach of contract, the cause accrues at the time of the breach.[30] In this, Virginia differs from the more modern rule that the claim accrues once the injured party discovers or should have discovered that a breach has occurred. If a defendant obstructs the plaintiff’s ability to file an action, the applicable limitations period shall be tolled for the time period the obstruction existed.^[31]

Actions Concerning Contracts.

In Virginia, the limitations period for any action based on contract is governed by Va. Code § 8.01-246.^[32] An action brought on an oral/parol contract or for unjust enrichment must be brought within three years from the date the right of action accrues.^[33] An action brought on a written contract signed by the party against whom the plaintiff seeks to enforce the contract must be brought within five years of the date the right of action accrued.^[34]

Uniform Commercial Code.

If the action is for breach of a contract for the sale of goods, the four-year Uniform Commercial Code limitations period set forth in Va. Code § 8.2-725 applies pursuant to the language of Va. Code § 8.01-246.

Personal Injury.

Any action for personal injury or wrongful death must be brought within two years after the cause of action accrues.^[35]

Damage to Property.

An action for damage to personal property must be brought within five years of the date the cause of action accrues.^[36]

Fraud.

Actions for damages due to fraud or mistake, and actions for rescission of a contract due to undue influence begin to accrue from the date of discovery by the plaintiff.  The applicable limitations period is two years. ^[37]

Discovery of Injury.

 Pursuant to Va. Code § 8.02-243(C)(2), if fraud, concealment or intentional misrepresentation prevented discovery of the injury within the two-year limitation period, the plaintiff may bring an action within one year from the date the injury is discovered or by the exercise of due diligence, should have been discovered.

Statutes of Repose and Limitations on Application of Statutes.

A five-year statute of repose limits actions against contractors, subcontractors, suppliers, architects, engineers, and others for injuries to real or personal property, personal injury, or wrongful death arising out of the defective and unsafe condition of an improvement to real property brought against persons performing or furnishing the design, planning, surveying, supervision or construction of such improvement.[38]

The time limitation begins to run from the completion of the person’s performance, which is most often the completion date of the project,[39] but is actually when the person is finished “performing or furnishing” for the project.[40] After five years, the statute of repose extinguishes not only the legal remedy but all causes of action, including those that may later accrue and those that have already accrued.[41] The statute of repose applies to actions for contribution and indemnity sounding in tort, but not to contractual indemnity.[42] It does not apply to manufacturers of equipment or machinery that may be installed, nor those in actual possession of the property, such as owners.[43] Finally, an important note for contractors: the statute of repose does not apply to the repair or replacement that continues the pre-existing use of the property.[44]

PRE-SUIT NOTICE OF CLAIM AND OPPORTUNITY TO CURE

Virginia Code Section 55-70.1 governs the statutory rights and obligations of a vendor and vendee for a new residence.  Before a claim for breach of statutory warranty may be brought, the vendor is entitled to written notice of the claim and is given an “reasonable” period of time, not to exceed six months, to cure the alleged defect.^[45]

The Warranty.

The warranty applies only to the sale of a new dwelling as defined in the statute.^[46]  In such contracts, the vendor warrants to the vendee that, at the time of the transfer of record title or the vendee’s taking possession, whichever occurs first, the dwelling with all its fixtures is, to the best of the actual knowledge of the vendor or his agents, sufficiently (i) free from structural defects, so as to pass without objection in the trade, and (ii) constructed in a workmanlike manner, so as to pass without objection in the trade.^[47]  A vendor that is in the business of building or selling such dwellings also warrants to the vendee that, at the time of transfer of record title or the vendee’s taking possession, whichever occurs first, the dwelling is fit for habitation.^[48]

The warranties are held to survive the transfer of title.^[49]  The warranties are in addition to any other express or implied warranties pertaining to the dwelling, its materials or fixtures.^[50]

Waiver of Warranty.

A contract for sale may waive, modify or exclude any or all express and implied warranties and sell a new home “as is” only if the words used to waive, modify or exclude such warranties are conspicuous as defined by statute, set forth on the face of such contract in capital letters which are at least two points larger than the other type in the contract and only if the words used to waive, modify or exclude the warranties state with specificity the warranty or warranties that are being waived, modified or excluded.^[51] If all warranties are waived or excluded, a contract must specifically set forth in capital letters which are at least two points larger than the other type in the contract that the dwelling is being sold “as is”.^[52]

Notice.

Virginia requires a homeowner seeking damages against the vendor to first provide the vendor with written notice of an alleged defect.^[53]  For any defect discovered after July 1, 2002, the vendee shall first provide the vendor, by registered or certified mail at the vendor’s last known address, or by hand delivery, a written notice stating the nature of the warranty claim.^[54]  After such notice, the vendor shall have a reasonable period of time, not to exceed six months, to cure the defect that is the subject of the warranty claim.^[55]

Deadlines.

If there is a breach of the statutory warranty, the vendee, or his heirs or personal representatives in case of his death, shall have a cause of action against the vendor for damages.^[56]  The warranty extends for a period of one year from the date of transfer of record title or the vendee’s taking possession, whichever occurs first.^[57] The warranty for the foundation of new dwellings extends for a period of five years from the date of transfer of record title or the vendee’s taking possession, whichever occurs first. ^[58]

A homeowner’s claim for breach of the statute must be brought within two (2) years after the breach.^[59]  For all warranty claims arising after January 1, 2009, sending the written notice required by the statute tolls the limitations period for six months.^[60]

INSURANCE COVERAGE AND ALLOCATION ISSUES

General Coverage Issues.

 

Virginia courts remain relatively conservative in interpreting the applicability of commercial general liability (CGL) insurance policies to claims for defective construction work.  In general terms, Virginia courts adhere to the approach that personal injury or damage to property other than the insured’s work is covered by the CGL policy, but that the performance of faulty work, in and of itself, is not covered.  Beyond these general concepts, there are a number of issues that arise, some of which have been resolved by Virginia courts, and some of which remain open for debate.

Trigger of Coverage.

What approach do Virginia courts apply to determine what liability policy or policies have been “triggered?” There is no clear answer to this question under Virginia law in terms of construction defect claims.  One federal district court in Virginia has recently predicted that Virginia’s Supreme Court would likely follow the “sensible general rule . . . that `coverage is triggered at the time of an injury-in-fact and continuously thereafter to allow coverage under all policies in effect from the time of injury-in-fact during the progressive damage.’”^[61]

Does defective work of the insured, without other damage, amount to covered “property damage?”

Again, this is an issue that has not been directly addressed by the Supreme Court of Virginia.  One federal district court that has examined it in Virginia has concluded that such defective work would not alone amount to “property damage” because it has not been constructed properly originally.^[62]

Is defective construction work considered to be an “occurrence” under Virginia law?

Though this issue has not been directly addressed by the Supreme Court of Virginia, most of the federal and state circuit courts that have addressed this issue have concluded, in general, that poor workmanship or defective performance under a contract is not an “occurrence” and is thus not covered by a CGL policy.^[63]

Does the “your work” exclusion of the standard CGL policy determine whether there is coverage for defective construction?

When the damage at issue comes within the definition of “your work” under the CGL policy, a Virginia court is likely to apply that language to find against coverage.^[64]

What about the existence of the “subcontractor” exception to the “your work” exclusions – does that modify the result under Virginia law?

 The two courts in Virginia that have directly addressed this issue have concluded that, if coverage did not exist in the “insuring agreement” of the policy, then the “subcontractor” exception to the “your work” exclusion did not grant or extend coverage.^[65]

CONTRACTUAL INDEMNIFICATION

By statute, there is some limitation on the ability to obtain or provide indemnification under construction-related contract in Virginia.  Under Virginia Code §11-4.1, any provision in a construction contract that would indemnify a party to the contract for personal injury or damage to property “caused by or resulting solely from the negligence of such other party or his agents or employees, is against public policy and is void and unenforceable.” The Supreme Court of Virginia has applied this prohibition when the contractual language at issue obligated the indemnitor to indemnify the indemnitee regardless of whether the claim was based upon the negligence of the indemnitor.^[66] Va. Code §11-4.4 has similar provisions for design professional such as architects and engineers.

Any other contractual indemnification provision should be enforceable under Virginia law. Indemnification causes of action for it accrue when the indemnitee has paid or discharged the obligation.[67]

In terms of indemnification for personal injury or property damage, attention should also be given to Virginia’s statue of repose, Va. Code § 8.01-250.

Contingent Payment Agreements

Enforceability.

Virginia courts previously  recognized and enforced “pay-if-paid” clauses and “pay-when-paid” clauses in construction contracts.  A clause that addresses the timing of payment is a pay-when-paid clause.^[68] A pay-when-paid clause does not shift the risk of non-payment to the subcontractor. However, if a clause unequivocally states that payment by the owner to the contractor is a condition precedent of payment by the contractor to the subcontractor, it is a pay-if-paid clause.^[69]

In the 2022 General Virginia Assembly Session, the General Assembly passed Senate Bill 550. This bill will take effect on January 1, 2023. For private projects, the bill establishes mandatory timing for payments from an owner to the general contractor, from the general contractor to its subcontractors, and likely further down the chain of contract, although the language of Senate Bill will likely need further interpretation by Virginia courts to determine how far down the chain of contract the mandatory payment terms flow. The bill also prohibits the application of contingent/condition precedent payment clauses ( “pay-if-paid clauses) under most circumstances for contracts on both public and private projects.

Requirements.

Prior to the enactment of Senate Bill 550, Virginia courts enforced pay-if-paid and pay-when-paid clauses that unambiguously expressed the intent of the parties.^[70] However, Virginia courts did not enforce pay-when-paid or pay-if-paid clauses that were ambiguous in meaning or intent.^[71]

Senate Bill 550 made the following changes to the Virginia Code:

1. Language was added to the Virginia Public Procurement Act (VA Code § 2.2-4354) to require any contract awarded by any state agency or any agency of local government shall include a payment clause that :
   1. Obligates a contractor on a construction contract be liable for the entire amount owed to any subcontractor with which it contracts.”
   2. “If the Contractor withholds all or a part of the amount promised to the subcontractor under the contract, the contractor shall notify the subcontractor, in writing, of his intention to withhold all or a part of the subcontractor’s payment with the reason for nonpayment”
   3. “Payment by the party contracting with the contractor shall not be a condition precedent to payment to any lower-tier subcontractor, regardless of that contractor receiving payment for amounts owed to that contractor.”
   4. “Any provision in a contract contrary to this section shall be unenforceable.”
2. Language was added to the recently enacted “Wage Theft” law (Virginia Code § 11-4.6):
   1. In any private construction contract between a private owner and a general contractor, the parties must include a provision that requires the owner to pay the general contractor within 60 days of receipt of an invoice following satisfactory completion of the work for which the general contractor invoiced.”
   2. An owner is not required to pay a general contractor amounts invoiced that are subject to withholding due to the general contractor’s noncompliance with the terms of the contract.”
   3. However, where an owner withholds payment, he shall notify the general contractor in writing, and with reasonable specificity, of his intent to withhold payment and his reason for nonpayment. Failure of an owner to make timely payments to a general contractor shall result in interest penalties consistent with §2.2-4355.
   4. Any construction contract whose parties are at least one general contractor and one subcontractor shall be deemed to include a provision under which a general contractor is liable to a subcontractor for satisfactory performance of subcontractor duties under the contract.
   5. Under such contract, a general contractor is required to pay a subcontractor within the earlier of :
      1. 60 days of the satisfactory completion of the portion of the work for which the subcontractor has invoiced, or
      2. Seven days after receipt of amounts paid by the owner to the general contractor or by a higher-tier contractor to the lower tier contractor for work performed by a subcontractor pursuant to the terms of the contract.
   6. Where a contractor withholds all or part of the amount invoiced by any lower-tier subcontractor under the contract, the contractor shall notify the subcontractor in writing of his intention to withhold all or part of the subcontractor’s payment with the reason for nonpayment, specifically identifying the contractual noncompliance, the dollar amount withheld, and the lower-tier subcontractor responsible for the contractual noncompliance.
   7. A “pay-if-paid” clause is unenforceable unless the party contracting with the contractor is insolvent or a debtor in bankruptcy.
   8. Failure of a contractor to make timely payments shall result in interest penalties consistent with §2.2-4355.

SCOPE OF DAMAGE RECOVERY

Personal Injury Damages vs. Construction Defect Damages.

The damages recoverable for defective or unfinished construction are either (1) the reasonable cost of completion according to the contract, if it is possible and does not involve unreasonable economic waste, or (2) the difference between the value of the product contracted for and the product received.[72] The proper measure depends on the facts of the case.

Attorneys’ Fees Shifting and Limitations on Recovery.

 In Virginia a prevailing party may recover its attorney’s fees from the losing party only when such fees are fixed by statute.^[73] Under exceptional circumstances, attorney’s fees may be awarded to the prevailing party in certain equitable suits.^[74]  In a construction dispute, attorney’s fees are not ordinarily recoverable.^[75] The parties may contractually agree that should a dispute arise, the losing party will be obligated to pay the prevailing party’s attorneys’ fees.

Consequential Damages.

Consequential damages are defined as, “Such damage, loss or injury as does not flow directly and immediately from the act of the party, but only from some of the consequences or results of such act.”^[76]  In a tort action, consequential damages are recoverable if the consequential injury is proximately caused by the defendant’s tortious conduct.^[77] In a contract action, consequential damages are recoverable if the circumstances leading to the injury were contemplated by the parties at the time of contracting.^[78]

Delay and Disruption Damages.

Unless contractually limited or waived, a contractor may recover damages for delay or disruption in performance, provided that the delay and/or disruption was not caused by the contractor.^[79] The Supreme Court of Virginia has held that “[w]hen a breach by one party imposes a delay on the ability of the other party to perform its obligations under a contract, ‘the damages are to be measured by the direct cost of all labor and material . . . plus fair and reasonable overhead expenses properly chargeable . . . during the reasonable time required’ to complete performance”.^[80] The Eichleay formula is an approved method (not the exclusive method) for calculating unabsorbed overhead damages in Virginia construction disputes where the plaintiff seeks delay damages.^[81]

The following are some typical recoverable delay claim damages:[82]

(1) Unanticipated job-site expenses, such as additional personnel costs, equipment and storage cost for construction material.

(2) Additional costs for services, such as fees for design professionals, construction managers, scheduling consultants, technical personnel, and attorneys (not including attorney fees spent prosecuting the delay claims, unless they are called for in the contract).

(3) Costs for extended construction financing beyond the completion date in the original contract, provided the additional financing results from contractor delays.  These costs may include additional construction loan interest payments and transaction costs necessary to negotiate and obtain extended financing.

(4) Lost profits (usually net profits only) are recoverable in Virginia, though some jurisdictions have ruled that lost profits for new businesses are too speculative and are not recoverable.

(5) Various other damages such as loss of warranty coverage, cost of administering the claim, additional licensing and permit costs, escalated start-up cost, delay claims by follow-up contractors, cost of defending mechanics’ liens, cost of renting temporary space or continuing business in pre-existing structure, and additional insurance cost.

Of course, it is always possible to include a “no damages for delay” clause in a private contract. Note, however, that public construction contract provisions barring damages for unreasonable delays have been declared void by statute in Virginia.

Economic Loss Doctrine.

 Virginia follows the economic loss doctrine, which provides that an injured party cannot sue in tort on a cause of action arising from the breach of a duty imposed by contract unless privity of contract exists between the defendant and the plaintiff. ^[83]  A party cannot sue in tort for damages which are purely economic in nature, i.e. disappointed economic expectations.^[84]  Virginia courts have held economic losses to include diminution in value, cost of repair and replacement, as well as lost profits and income. ^[85] So, while lack of contractual privity is not a defense to claims for property damage or personal injury,[86] contractual privity is still a requirement for recovery of purely economic loss.[87] Therefore, contractors and subcontractors typically do not have a direct right of recovery against architects, and subcontractors need to use the mechanic’s lien statutes to be able to recover from owners.

Interest.

It is well settled Virginia law that parties may contract for interest to be payable in an agreement for the payment of money. ^[88]  The Virginia Supreme Court has held when there is no express contract to pay interest; there is an implied contract to do so.^[89]  Where one has use of another’s money, he must pay interest upon the sum held from the date he receives it until the date he repays it.^[90]  The parties to an agreement may contractually agree that interest on a debt is not recoverable.^[91] A Court may include pre and/or post-judgment interest in its verdict.[92] If no date is set by the verdict, interest on a judgement will begin to accrue from the date of the judgment.^[93]

Va. Code § 6.2-302 sets the judgement rate of interest at six percent (6 %) per annum, or the rate of interest specified in the parties agreement if the interest is charged pursuant to a valid contract.^[94]  If the parties have not contractually agreed to the rate of interest, the court shall apply a rate of six percent (6%) per annum to any pre and/or post-judgment interest awarded.^[95] Interest cannot be collected on costs expended in litigation. ^[96]  The contractual rate of interest cannot exceed twelve percent (12%) per annum, with limited exceptions.^[97]

Punitive Damages.

Punitive damages may be recovered in tort actions, when the tort is committed under aggravating circumstances.^[98]  Generally, punitive damages may not be recovered in actions for breach of contract.^[99]  However, in certain cases where the breach is so malicious it amounts to an independent tort, punitive damages are recoverable if the plaintiff alleges malice, wantonness or oppression.^[100]

Liquidated Damages

Many construction contracts contain liquidated damages clauses.  Parties entering into a construction contract may avoid all questions of future delay damages resulting from the breach of the contract by agreeing upon a definite sum that will be paid by the contractor to the owner in the event of a failure to complete the project on time.[101]  These liquidated damages are used because of the difficulty of establishing in advance the actual damage an owner might suffer because a project is delayed. On the one hand, the actual damages do not need to be proved, which is a big advantage for owners. On the other hand, if actual damages are greater than the liquidated damages amount, then the owner cannot recover for their whole loss.[102]

There are three general requirements for the enforcement of the liquidated damages clause.  First, the damage caused by the breach or delay must be difficult or impossible to estimate accurately.  Second, the parties must intend that the liquidated damages be compensation for damages suffered, not a penalty.  Finally, the amount of liquidated damages must be a reasonable estimate of the actual amount of loss, judged from the perspective of the parties at the time the contract was formed.

The liquidated damages will be upheld even though actual damages suffered are much more or much less than the amount prescribed in the liquidated damages clause, as long as the amount of liquidated damages is reasonable.

CASE LAW AND LEGISLATION UPDATE

During the 2019, 2020, and 2022 session, the Virginia General Assembly passed a couple bills of interest:

HB 1738 (2019) –   This bill requires that plans and specifications for the construction of any new public-school building or any addition or alteration to an existing public-school building be reviewed by an expert in building security and crime prevention through building design prior to construction. The expert’s comments must be submitted with a copy of the final plans and specifications to the Superintendent of Public instruction.

HB 1966 (2019) – This bill requires local building departments to provide a written explanation to an applicant for a building permit who is denied the permit detailing the reasons why the department denied the application. The applicant may then submit a revised application addressing the deficiencies identified, and the department is encouraged to limit its review of the revised applications to only those portions previously deemed inadequate.

HB 2071 (2019) – This bill set the maximum allowable sum of all jobs performed  in a one-year contract term for job order contracts to $6,000,000. The bill established an exception   to allow job order contracting for safety improvements or traffic calming measures for individual job order up to $250,000.

HB 889 (2020) – This bill amends the language in the “Wage Theft” law (Virginia Code § 11-4.6) to provide protection to subcontractors and clarifies a contractor’s lability for wages of subcontractor’s employees.

The “Wage Theft” law was enacted in 2019, and provides that the general contractor and the subcontractor at any tier are jointly and severally liable to pay any subcontractor’s employees at any tier the greater of (i) all wages due to a subcontractor’s employees at such rate and upon such terms as shall be provided in the employment agreement between the subcontractor and its employee or (ii) the amount of wages that the subcontractor is required to pay its employees under the provisions of applicable law, including provisions of the Virginia Minimum Wage Act.

The General Contractor is the employer of a subcontractor’s employees at any tier for the purposes of Virginia Code § 40.1-29. The bill also provides that except otherwise provided in a contract between a general contractor and the subcontractor, the subcontractor shall indemnify the general contractor for any wages, damages, interest, penalties, or attorney’s fees owned as a result of the subcontractor’s failure to pay wages to the subcontractor’s employees, unless the subcontractor’s failure to pay wages was due to the general contractor’s failure to pay moneys due to the subcontractor in accordance with the terms of their construction contract.

The provisions of § 11-4.6 only apply if (i) it can be demonstrated that the general contractor knew or should have known that the subcontractor was not paying his employees all wages due, (ii) the construction contract is related to a project other than a single family residential project, and (iii) the value of the project, or aggregate costs of projects under one construction contract, is greater than $500,000.

Additionally, the bill provides that a general contractor or subcontractor, regardless of tier may offer as evidence a written certification, under oath, from the subcontractor in direct privity of contract with the general contractor or subcontractor stating that (a) the subcontractor and each of his sub-contractors has paid all employees all wages due for the period during which the wages are claimed for the work performed on the project and (b) to the subcontractors knowledge all sub-contractors below the subcontractor, regardless of tier, have similarly paid their employee all such wages. Any person who falsely signs such certification shall be personally liable to the general contractor or subcontractor for fraud and damages the general contractor or subcontractor may incur.

SB  121  (2022) – This bill exempts from  the “licensure requirements for contractors” any work undertaken by a person providing construction, remodeling, repair improvement, removal, or demolition valued at $25,000 or less per project on behalf of a properly licensed contractor. The current law provides this exemption to such work  valued at $5000 or less per project.