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    Understanding the 150 Day Rule is Critical to Successfully Enforcing Your Mechanic's Lien Rights

         Mechanic's liens provide contractors with a powerful remedy in collecting sums due on construction projects in which labor or materials are supplied by the contractor. In order to take advantage of this powerful remedy a contractor should be aware that the benefit comes at the cost of strict compliance with the mechanic's lien rules established by the statute and by court decisions. In order to successfully perfect and enforce a mechanic's lien claim, it is therefore important to understand that two important time limits govern Virginia mechanic's liens. The first important time limit is the ninety (90) day rule. A lien must be filed within ninety (90) days from the end of the month in which the work is done or materials are furnished. The second important time limit is the application of the 150 day rule. In light of a recent court case arising in Fairfax County, it is now absolutely crucial that contractors understand the effect of this rule.

         The mechanic's lien statute provides that "no (lien) shall include sums due for labor or materials furnished more than 150 days prior to the last day on which labor was performed or materials furnished to the job preceding the filing of such memorandum." This means that there is a 150-day envelope or window around your account. The 150 day "window" or "time boundary" limits the work that can be included and in a given memorandum of mechanic's lien. Not only must the lien be filed within 90 days from the last day of the month in which the claimant last performs any labor or provides any materials, but the entire lien claim may not include any deliveries or work performed 150 days prior to the last date in which materials were supplied or labor performed on the project. A contractor who provided labor and materials to a construction project over a one-year period would only be permitted to claim for work provided to the project in the 150 days prior to the last date in which the labor or material is provided to the project. A portion of his claim will therefore be lost and under the statute is unrecoverable.

         What if a memorandum of lien does include a claim for such "stale" claims - i.e., unrecoverable claims for work performed more than 150 days prior to the last date that materials or labor are supplied to the project? In Johnson v. Tadlock, a recent Fairfax County circuit court case, the court struck down a lien which included a claim for work performed more than 150 days prior to the last date in which labor and materials were furnished to the project. The issue before the court was the validity of a memorandum of mechanic's lien that included a claim for work performed within 150 days of the last date that labor and materials were furnished to the site, but which also included a claim for work performed more than 150 days prior to that date. The evidence showed that a portion of the site work was done outside of the 150 day window allowed by the statute. After reviewing the statutory language ("no memorandum ... shall include ...") and citing the general proposition that mechanic's lien must strictly conform to the statutory requirements, the court concluded that the inclusion of the stale claim in the memorandum of lien would invalidate the entire lien claim. The result of this decision is that not only is work performed outside of the 150-day window not recoverable, but inclusion of such work in the lien memorandum will invalidate your entire claim - even your claim for work otherwise recoverable and performed within the 150 day window.

         The 150-day rule requires that credit managers carefully monitor the status of their accounts receivable. Accounts or portions of accounts which remain unpaid after 90 days should be scrutinized and should trigger prompt action on the part of the contractor. Careful management, record keeping, and accounting are needed to determine the dates that materials and labor are supplied at a given project and to insure that a memorandum of lien can be prepared which will include only recoverable sums due your firm. The 150-day limitation discussed above may very well require the filing of more than one lien on any particular job and the statute permits the filing of any number of such memoranda.

         This Alert is provided as service to the construction community in general and is not intended as legal advice in any specific instance. We hope this will be of use to you.

    Copyright 2007 by Cowles, Rinaldi, Judkins & Korjus, Ltd.