The fastest and surest way to remove a mechanic’s lien from the land records is to “bond off” the lien pursuant to Virginia Code Section 43-70 or Section 43-71. The property owner, the general contractor or any other party in interest can accomplish this. It is not necessary to prove anything, and the court need not make any hard decisions. In this procedure, the court will remove the mechanic’s lien from the property, [1] but the mechanic’s lien is replaced with cash or a surety bond, something just as good to the claimant.

The cash or surety bond assures the mechanic’s lien holder of payment, if the mechanic’s lien holder can prove that it had a valid, enforceable and collectable mechanic’s lien. It will still be necessary for the mechanic’s lien holder to prove all aspects of the mechanic’s lien case, including the existence of a debt, timely filing of the mechanic’s lien, the relative priorities of all enforceable liens against the property, etc.[2] The mechanic’s lien holder must still file a timely Complaint to Enforce Mechanic’s Lien.[3] It will be necessary to name the surety as a party defendant.[4] It is also necessary to name as a party defendant the person that acquired the bond (bond principal).[5] It will no longer be necessary to name the property owner or all lenders and trustees on deeds of trust recorded prior to commencement of the improvements on the property,[6] although these parties can be added if desired.[7] It is not clear, however, whether there are still other necessary parties such as the holders of other mechanic’s liens,[8] judgment liens or any other liens attaching after the commencement of improvements on the property.

It is necessary to give the mechanic’s lien holder at least five days notice before bonding off a mechanic’s lien. Depending on how often the applicable court has “Motions Day,” and if he claimant is willing to agree to cooperate, the process to release a mechanic’s lien can be as fast as one week. If a cash bond is used, it should be an amount equal to the mechanic’s lien claim, plus all “costs.” If a surety bond is used, it must be in the penalty of double the amount of the lien, plus costs.

To bond off a mechanic’s lien, a property owner or general contractor will incur the cost of petition filing, one attorney court appearance and a bond premium. Since this process is so fast and so certain to succeed, however, it is usually the best choice to get a mechanic’s lien released.

Of course, if your bank is willing to simply hold the amount of the mechanic’s lien in escrow with your funds, that may solve an immediate problem getting your loan draw, save a bond premium and legal fees in that court appearance. Then the claimant faces the choice of filing a complaint to enforce the mechanic’s lien within six months after the mechanic’s lien was filed, which is far more expensive than just filing a memorandum of mechanic’s lien.[9]

Readers are welcome to reprint or republish this article with the following attribution:

Use the Free Construction Law Survival Manual at www.FullertonLaw.com

James D. Fullerton
Fullerton & Knowles, P.C.

12642 Chapel Rd.
Clifton, VA 20124
(703) 818-2600, Ext. # 205
JFullerton@FullertonLaw.com

[1] Synchronized Constr. Servs. v. Prav Lodging, LLC, 288 Va. 356, 764 S.E.2d 61 (2014); George W. Kane, Inc. v. Nuscope, Inc., 243 Va. 503, 416 S.E.2d 701 (1992).

[2] York Federal Savings & Loan Assoc. v. Hazel, 256 Va. 598, 506 S.E.2d 315 (1998); George W. Kane, Inc. v. Nuscope, Inc., 243 Va. 503, 416 S.E.2d 701 (1992).

[3] Johnson Controls, Inc. v. Norair Engineering Corp., et. al. 86 Va.Cir.138 (2013).

[4] Va. Code Anno. §43-71.

[5] Synchronized Constr. Servs. v. Prav Lodging, LLC, 288 Va. 356, 764 S.E.2d 61 (2014); Johnson Controls, Inc. v. Norair Engineering Corp., et. al. 86 Va.Cir.138, 140 (2013); ADS Constr., Inc. v. Bacon Constr., Co., 85 Va. Cir. 456 (Va. Cir. Ct. 2012).

[6] George W. Kane, Inc. v. Nuscope, Inc., 243 Va. 503, 416 S.E.2d 701 (1992).

[7] George W. Kane, Inc. v. Nuscope, Inc., 243 Va. 503, 416 S.E.2d 701 (1992).

[8] Synchronized Constr. Servs. v. Prav Lodging, LLC, 288 Va. 356, 764 S.E.2d 61 (2014) [the general contractor is not a necessary party once the lien has been bonded off, at least where the general contractor had not preserved its lien rights. The general contractor had no interest in the bond, which was now the subject matter of the enforcement action. This case may imply that a general contractor would be a necessary party if it still had lien rights and a right to payment out of the bond].

[9] See Construction Law Survival Manual at www.Fullertonlaw.com, chapter on Virginia Mechanic’s Liens, section on Enforcement of Mechanic’s Lien. Synchronized Constr. Servs. v. Prav Lodging, LLC, 288 Va. 356, 764 S.E.2d 61 (2014) [the general contractor is not a necessary party once the lien has been bonded off, at least where the general contractor had not preserved its lien rights. The general contractor had no interest in the bond, which was now the subject matter of the enforcement action. This case may imply that a general contractor would otherwise be a necessary party]; Tarmac Acquisition v. Gold Line Concrete Const., 26 V.C.O. 312 (1992); Vulcan Materials Company v. PWC Development Limited Partnership, Ch. No. 30047 (Prince William Co. Cir. Ct. 1991). See also Ferguson Enterprises, Inc. v. Equity Resources, Inc., Ch. No. 30347 (Prince William Co. Cir. Ct. 1991); See In re Richardson Builders, 123 B.R. 736 (W.D.Va. 1990).