Mechanic's Lien Release - need separate one for each subcontractor?

5 Replies

I am typing up a Mechanic's Lien Release to be used when completing my rehabs (in Virginia) and making the final payment to my contractor. How do I protect myself from liens from my contractor's subcontractors and suppliers? Do I need to get all of his subs and suppliers to sign the Release also? I sometimes don't know every subcontractor and supplier he's using.

Any input would be much appreciated!

In short, yes.  You also need to know the mechanics lien law, including the required noticing.  Here, in order to file a lien as a sub, or a supplier (not in direct contract with the owner) you must file an official NoticeTo Owner, notifying them that you Are working on their job and will have lien rights.  That notice has to be filed prior to 45 days from starting on the job, or prior to the owner makings full payment to the GC, whichever occurs first.

@Mike Oconnell

As  @Wayne Brooks said, you should research your laws regarding liens, lien waivers, subcontractor's lien rights, etc.  

Some states (such as Texas) have statutory lien waivers are supposed to be used. So, before you go drafting your own version you should confirm you're not doing yourself more harm than good. And if you're paying your contractor at intervals, you'll want waivers each time you make a payment and don't make a final payment until you have the final lien waiver in hand. I would also confirm what your HML / PML and title company will require.

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@Mike Oconnell  

Some states will have a form they upload to their government site.  I searched Virginia briefly and found something (although I would verify).  And as Wayne & Mike stated understanding your mechanic's lien laws is very important.  

And remember even with a good relationship it can be difficult getting lien releases after final payment has been issued.  Set up a system with progress payments (partial/conditional lien releases) & final lien releases (unconditional/final lien releases).  If you have a system set up you are more likely to follow it.  If you are an owner GC you might have several dozen contractors/vendors.  That's a lot to keep up with while managing everything else (without a system set up).