PSA: Performing Construction Work in Virginia Requires a Contractor’s License

Abulldozer photos a Virginia construction attorney, I often get calls for assistance in dealing with payment disputes.  Frequently, these calls come from out of state contractors and subcontractors that have performed work in Virginia.

One of the first questions that I ask is whether these contractors and subcontractors hold a contractor license from the Commonwealth of Virginia. While most do, some do not, likley because they are unaware of the requirement in Virginia that all contractors be licensed when performing work in the Commonwealth. While I haven’t done an exhausive survey of the statutes and regulations of every state of the union on this point, the confused silence leads me to believe that such is not a requirement in every state.  The most common reaction after “I had no idea I needed one” is that the general contractor holds a license so they did not think they needed to hold one.  As I stated above, this is incorrect.

Sometimes this is not a problem because the project is commercial, payments flow regularly, and, frankly, noone gets caught.  However, the risk is great for the unlicensed subcontractor or contractor even where they hold a license from another state.  These risks run from non-payment due to a lack of license to the inability to record a mechanic’s lien.  In short, working without a Virginia contractor license is asking for trouble in the Murphy’s Law goverened world of construction.  If you don’t get paid and don’t have a license, you don’t have many options.

To conclude, be sure to have your Virginia contractors license with the proper designations before beginning work in Virginia.  Check out the Virginia Department of Professional and Occupational Regulation website for how to obtain one.

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PSA: Performing Construction Work in Virginia Requires a Contractor’s License

Terms of Your Teaming Agreement Matter

air force photoThese days in construction, and other pursuits, teaming agreements have become a great method for large and small contractors to work together to take advantage of various contract and job requirements from minority participation to veteran ownership.  With the proliferation of these agreements, parties must be careful in how they draft the terms of these agreements.  Without proper drafting, the parties risk unenforceability of the teaming agreement in the evewnt of a dispute.

One potential pitfall in drafting is an “agreement to agree” or an agreement to negotiate a separate contract in the future. This type of pitfall was illustrated in the case of InDyne Inc. v. Beacon Occupational Health & Safety Services Inc. out of the Eastern District of Virginia.  In this case, InDyne and Beacon entered into a teaming agreement that provided that InDyne as Prime would seek to use Beacon, the Sub, in the event that InDyne was awarded a contract using Beacon’s numbers.  The teaming agreement further provided:

The agreement shall remain in effect until the first of the following shall occur: … (g) inability of the Prime and the Sub, after negotiating in good faith, to reach agreement on the terms of a subcontract offered by the Prime, in accordance with this agreement.

InDyne was subsequently awarded a contract with the Air Force and shortly thereafter sent a subcontract to Beacon and requested Beacon’s “best and final” pricing.  Beacon protested by letter stating that it was only required to act consistently with its original bid pricing.  Beacon then returned the subcontract with the original bid pricing and accepting all but a termination for convenience provision.  Shortly thereafter, InDyne informed Beacon that InDyne had awarded the subcontract to one of Beacon’s competitors.  Beacon of course sued and argued that the teaming agreement required that InDyne award the subcontract to Beacon.

The Court disagreed.  After several paragraphs of analysis of the arguments of the parties, and with reference to the above quoted language, the Court found this language to create an agreement to negotiate in the future that is unenforceable.  In doing so the Court stated:

Although Beacon makes a strong case that the teaming agreement is more definite than those found by courts to be unenforceable under Virginia law, “[w]ell-established precedent compels us not to impose a subcontract on parties to a teaming agreement when they have expressly agreed to negotiate the material terms of a subcontract in the future.” The parties chose to have Virginia law apply to the terms of the teaming agreement. Under the clear precedent in Virginia, this teaming agreement is unenforceable.

In short, where a teaming agreement expressly states that the parties still have some negotiating work to do on material terms of any subcontract moving forward the teaming agreement will not likely be enforceable by its own terms in the event that the parties fail to agree to the terms of any future subcontract.

As always, I recommend that you read the whole opinion yourself in consultation with an experienced Virginia construction attorney to both double check my analysis and to assure that any teaming agreement will be enforceable.

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Terms of Your Teaming Agreement Matter

Happy New Year 2019 from Construction Law Musings

new years photoAnother year of work, fun and interesting cases and relationships is in the books.  I hope all of you had a great 2018 and I wish you a prosperous 2019.  Without further ado, Happy New Year from Construction Law Musings and The Law Office of Christopher G. Hill, PC.

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Happy New Year 2019 from Construction Law Musings

Happy Holidays 2018 from Construction Law Musings

Christmas Tree photoHappily, the older two kids are home from college and Musings is enjoying some time off for Christmas.

I wish you all Happy Holidays and Merry Christmas from The Law Office of Christopher G. Hill, PC and Construction Law Musings To all of my friends, colleagues and most importantly, family, I hope you have a safe, warm and wonderful holiday.

Thank you for your continued support and I look forward to a great 2019 with you, my readers.

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Happy Holidays 2018 from Construction Law Musings

Time for Some Fishing and R and R

FishingWell, I’m off for some fun in the sun and on a boat for a week with my family (it being one of the few times of year that I have them all home) so I won’t be posting any new Musings this week.  In the meantime, peruse the other posts on Virginia mechanic’s liens, bond claims and the like.  Also be sure to check out my Guest Post Friday posts for different perspectives on the world of construction.

Thanks again for continuing to read and I’ll be back musing again after the holidays.

As always, I welcome your comments below.  Please subscribe to keep up with this and other Construction Law Musings.

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Time for Some Fishing and R and R

More thoughts on Virginia Mechanic’s Liens

Originally posted 2010-04-30 09:00:16.

As we settled yet another construction case on the courthouse steps today, I began to think about what I should post to begin 2009. Of course, given the construction industry slowdown that is predicted, and the trend at construction projects around the Commonwealth of Virginia that looks to me as if payments will be harder to come by from Owners less willing, for financial reasons, to work with contractors, mechanic’s liens will be more useful, and necessary, now than ever.

Virginia mechanic’s liens are unusually strong because your memorandum of lien takes priority over all prior liens on the property that you have improved (including from the bank that is financing the project) except in very limited circumstances. What this means is that, should you properly file and sue to enforce your lien, you get to foreclose and have first crack at any money. By contrast, a judgment lien takes priority only over liens filed after the lien is recorded.

As I stated in my primer on Virginia mechanic’s lien law in an earlier post, filing a mechanic’s lien in Virginia is a picky business. You need to be sure that you meet your time limits, include the correct information in your memorandum, and assure that you do not lien for a penny more than that to which you are entitled.

Failing to do any of these things can, and will, cause you to lose your lien, killing any advantage that you could have gained by filing the lien and leaving you with run of the mill contract rights (I will be writing on basic do’s and dont’s for construction contracts in a later post). While a breach of contract suit is a viable option, a mechanic’s lien gives you leverage that a mere lawsuit will not.

Scott Wolfe at the Construction Lien Blog has posted several short items on Virginia Lien Law that are worth checking out. However, while these posts are accurate and give the basics of lien law in Virginia, please hire an attorney (whether its me or another experienced construction lawyer) to help you file a lien and enforce it in Virginia because of the pitfalls that can occur from the slightest mistake.

Please also check out my links for other construction resources.

Please let me know your thoughts and feel free to e-mail me or comment with any questions.  Also, please subscribe to keep up with this and other Construction Law Musings.

More thoughts on Virginia Mechanic's Liens

© Construction Law Musings- Richmond, VA is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 license.

More thoughts on Virginia Mechanic’s Liens

Ten Years of Musings. Wow!

birthday photoWho knew that 10 years ago, this tiny announcement post would have spawned a blog that lasted this long?  I sure didn’t.  Back then, this blog was on the Blogger platform and I started it basically on a whim to see whether I would enjoy the process and learn something.  I found that the answer was “yes” on both counts.

The blog has since taken on a life of its own in many respects, allowing me to meet some of the great construction pros that have provided a guest post or two for Musings and adding their different perspectives.  Musings has also kept me up on at least most of the trends in Virginia construction law by making me post consistently (though sometimes less consistently than others).  Now, 791 posts and ten years later, I find it hard to believe that so much time has passed and effort has been put into what started with a vague idea that I’d post from the perspective of a Virginia construction lawyer

Over the last 10 years my children have gone from little kids to college (the older two) and high school and I couldn’t be more proud of each of them.  These three are a great joy for me to watch grow up. Our two dogs continue to make life more furry, warm, and loveable and, saving the very best for last, my wonderful, supportive and beautiful wife continues to make life at the Hill house a great place to live. Without the support of the world’s best family, Musings and the practice of law wouldn’t be the fun that it is.

On the professional side, I was named for the 12th straight year (and all 8 years as a solo) to the Virginia Business Legal Elite in Construction Law.  I joined the Virginia Bar Association Construction and Public Contracts Law Section Council.  I was privileged to both help plan and also speak at the 39th Annual Construction and Public Contracts seminar (if you didn’t make it this year, be sure to make it next year), and while my terms on the State Bar Construction Law and Public Contracts section committee have ended, I still remain active in both that section and the Associated General Contractors of Virginia.  I also kept up my mediation practice and my certification as a mediator here in Virginia.  As always, I’ve also gained some new friends and rekindled some old friendships both in the legal and construction communities.

So without further ado, thanks to all of you who read Construction Law Musings. Thank you to all of my friends, clients and colleagues who support this construction law blog and my construction law practice (you know who you are and it would take weeks to list you all). And, most importantly, thank you to my great family for all that you do to support me in my solo career and my life in general. You all have made the last ten years of Construction Law Musings a fun and rewarding ride.

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Ten Years of Musings. Wow!