12.12.17 Mechanic's Liens

Mechanic’s Lien Coverage Requires Underwriter Approval.

Priority

Can the Construction Loan have initial priority over mechanic's liens?

Construction loan mortgages may have priority over subsequently filed mechanic's liens if the construction loan mortgage is properly filed of record prior to the date labor, material or machinery is furnished. W.Va. Code Sec. 38-2-17

Will initial priority as to future disbursements be retained only if certain procedures are followed?

Initial priority as to future disbursement can be retained only if the procedures set out in W.Va. Code Sec. 38-1-14 are followed. The construction loan mortgage must be a credit line deed of trust and secure obligatory advances. If the advances under the construction loan deed of trust are non-obligatory, subsequently filed mechanic's liens may obtain priority if they give written notice to the mortgagee.

If priority is lost, can it be regained?

There is no statutory way to regain priority.

Is there a difference between on-site and off-site work?

There are no statutes relating to a difference between on-site and off-site work.

Is priority the same for all contractors and subcontractors on the same project?

No. W. Va. Code Sec. 38-2-18 sets out that the liens filed by persons doing labor and furnishing material or equipment to the subcontractors and general contractors have priority over liens filed by the subcontractors and general contractors. Any liens filed by subcontractors have priority over liens filed by the general contractor. Liens within the same class have equal dignity with one another.

Time Limits

What are the time periods for recording lien claims by original contractors and subcontractors?

Laborers, materialmen, surveyors, engineers, and contractors under direct contract with the owner must file the verified statutory form of notice of mechanic's lien as set out in W.Va. Sec. 38-2-8 within 100 days of the completion of the contract, the last day that work was done material or equipment furnished, or date on which work was ceased. W.Va. Sec. 38-2-10 and W. Va. Sec. 38-2-12

All subcontractors, materialmen, mechanics, laborers, engineers and surveyors who do not directly contract with the owner must file their lien within 100 days of the completion of the subcontract, the furnishing of the material, machinery or equipment or labor, or last work contributed to the project.

After what period of time can you waive a mechanic's liens if no suit is filed?

An action to enforce a perfected mechanics lien must be filed within 6 months from the date the mechanic's lien notice was filed in the county clerk's records. W. Va. Sec. 38-2-34

Removing or Waiving Liens

Is there a statutory procedure for affidavits of completion or notices of completion?

There are no statutes relating to affidavits or notices of completion.

Can a statutory bond terminate the mechanic's liens as an encumbrance on the title?

There are no statutes providing for a release of a mechanic's lien via a surety bond supplied by the owner of the property. However, the owner can limit his exposure to mechanic's liens by recording his contract with the general contractor along with a surety bond in compliance with W.Va. Code Sec. 38.2-24 in the county clerks records prior to the beginning of the construction. W. Va. Code Sec. 38.2-24

Can the original, general, or subcontractors by contract or waiver agreement subordinate or waive mechanic's liens by general contractor and/or subcontractors?

There are no statutes relating to subordination or waiver of mechanic's liens.

Can a bona fide purchaser or bona fide lender take free of mechanic's liens later filed for earlier work?

There are no statutes relating to bona fide purchaser or lenders in regards to mechanic's liens in West Virginia.

Title Company Requirements

What are the customary requirements for issuing Loan Policies on construction loan mortgages?

An on-site inspection is required showing no visible commencement of construction along with other evidence proving that no materials or equipment have been furnished.

Is it customary to add a "pending disbursement" clause or mechanic's liens exception in the Loan Policy insuring a construction loan mortgage?

Yes, a pending disbursement clause is used in loan policies issued in West Virginia.

Also subject to any bulletins relating to mechanic’s liens.