Real Estate Law

Prospective Waiver of Lien Rights by Subcontractors & Suppliers

By Jay Rixey, Associate, Vandeventer Black LLP

Earlier this year, the General Assembly enacted legislation amending Virginia Code § 43-3, [subscribers can access an enhanced version of this statute: lexis.com | Lexis Advance], providing that a subcontractor, lower-tier subcontractor, or material supplier may not waive or diminish his lien rights, right to assert bond payment claims, or the right to assert claims for additional costs in advance of furnishing any labor, services, or materials. Any provision in a contract that prospectively waives or diminishes such rights executed in advance of providing any labor, services, or materials is null and void. The amended provisions were effective July 1, 2015.

Previously, Section C of Virginia Code § 43-3 provided that any right to a lien may be waived in whole or in part, by any party, without exception. The revised Section C now provides, in relevant part (amended language in italicized bold):

“Any right to file or enforce any mechanics’ lien granted hereunder may be waived in whole or in part at any time by any person entitled to such lien, except that a 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. A provision that waives or diminishes a subcontractor’s, lower-tier subcontractor’s, or material supplier’s lien rights in a contract executed prior to providing any labor, services, or materials is null and void.

This revised statute now brings the Commonwealth of Virginia in line with the majority of states that find it against public policy to allow prospective waivers of certain rights, including lien rights. Ultimately, this revised statute protects subcontractors and suppliers by providing them with a stronger bargaining position during negotiations by knowing that any prospective lien waivers required in their contracts will be null and void after July 1, 2015.

It is important to point out that this statute does not cover general contractors. As a result, general contractors may still waive their lien rights by contract. Furthermore, the statute only prohibits the waiver of prospective lien rights by subcontractors and suppliers, and does not prohibit the waiver of lien rights by subcontractors and suppliers after the provision of labor, services, or materials.

These articles are meant to bring awareness to these topics and are not intended to be used as legal advice.

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