Creditors' Rights

Question 1

What is required for a mechanic’s lien?

Answer 1

Performance of services or furnishing of materials valued at $150 or more for work on property

Question 2

How do you perfect a mechanic’s lien if you are a:

General contractor

Sub-contractor

Answer 2

General contractor

• File memorandum of mechanic’s lien with clerk’s office in city or county where property is located
• Within 90 days of completion or termination of work
• Including:
  
  • Name of owner
  • Amount of lien
  • Description of property

Sub-contractor

• Same as above
• Also notify owner and general contractor

Question 3

What is the blanket defense to a mechanic’s lien?

Answer 3

By not proportioning the lien between different pieces of property, the mechanic will interrupt other creditors

But, Virginia law allows blanket liens if single contract for the work performed

Question 4

What is the one lot defense to a mechanic’s lien?

Answer 4

If a mechanic’s lienholder releases one lot subject to the lien, he is estopped from enforcing the lien against the remaining lots

Question 5

Fraudulent Conveyances

Answer 5

Certain transfers by debtors may be set aside by the debtor’s creditors
Existing Creditors: can challenge fraudulent or voluntary transfers made for less than FMV
Future Creditors: can challenge transfers made with the intent to defraud

Question 6

Badges of Fraud

Answer 6

1. Retention of an interest in the property by the transferor
2. Transfers between family members for antecedent debt
3. Pursuit of transferor or threat of litigation by creditors
4. Lack of gross inadequacy of consideration
5. Retention or possession of the property
6. Fraudulent incurrence of indebtedness after conveyance

Question 7

Proof of Intent to Defraud

Answer 7

Creditor bears the burden of establishing the transferor’s intent to defraud by clear and convincing evidence