Notice Directories & Lien Registries
Pennsylvania 1 Year Later & Iowa 5 Years Later
In 2013, Iowa implemented its Mechanic’s Notice and Lien Registry, and in 2017, Pennsylvania implemented its Construction Notices Directory. Technically today isn’t “throwback Thursday” but let’s play a game of “Where Are They Now?”!
Let’s Start with Iowa
Iowa’s Mechanic’s Notice and Lien Registry (Registry) houses Notices of Commencement and Preliminary Notices for residential projects as well as mechanic’s lien documents for residential and commercial projects. The 2013 amendments included clarification of what constitutes a residential project:
“Residential construction means construction on single-family or two-family dwellings occupied or used, or intended to be occupied or used, primarily for residential purposes, and includes real property pursuant to chapter 499B.” – 572.1, Definitions and rules of construction. (10)
For general contractors furnishing to residential projects, a Notice of Commencement must be posted on the Registry no later than 10 days after commencement of the project. Subcontractors and material suppliers should post a Preliminary Notice on the Registry as soon as possible to trap funds (the lien, when later filed, may only include labor and or materials provided after the Preliminary Notice is posted and served).
It’s been five years; are contractors and subcontractors properly securing their rights? According to John Lande, author of Major Changes to Iowa’s Mechanic’s Lien Law: Five Years Later it’s been a bit of a mixed bag.
“Many contractors who have contracts with a residential property owner get tripped up by the 10-day commencement notice requirement. They often do not post the notice, but nevertheless attempt to enforce a mechanics’ lien when they don’t get paid. When they do, however, they expose themselves to potential liability… The 2013 lien law changes have given property owners leverage over contractors when the contractors do not file the commencement notice.”
On to Pennsylvania
As of late, it may seem like Pennsylvania has been a popular state in our blog — at least it seems that way to me. Truth is, it has been popular, because there have been several significant changes to PA’s mechanic’s lien laws over the past 1-2 years.
In 2017, Pennsylvania’s State Construction Notices Directory (Directory) went live, storing Notices of Commencement, Notices of Furnishing, Notices of Non-Payment and Notices of Completion for projects costing $1,500,000 or more.
The project owner may file a notice of Commencement on the Directory, prior to commencement of work. If the Notice of Commencement has been filed, then those furnishing to the projects should file a Notice of Furnishing on the Directory within 45 days after first furnishing. Also, although it isn’t required to preserve lien rights, would-be-claimants may file a Notice of Non-Payment on the Directory.
Unlike the tenure of Iowa’s Registry, Pennsylvania’s Directory is still unknown to some. That is according to John Greenhall & Christopher Reese in their recent article, One Year Later: An Update on the PA Construction Notices Directory. Despite being “unknown” Greenhall & Reese state the Directory has had a successful first year.
Greenhall & Reese mention the Directory has “led to a need for contractors to ‘tune-up’ their contract documents to reflect the Directory’s contractual notice requirement” which adds value for contractors, because they can “restrict the group of potential lien claimants to only those that complied with the Notice of Furnishing Requirement.”
Has there been an increase in any other activity? Yes, Greenhall & Reese believe there has been an increase in bond activity.
“Though this is difficult to assess with certainty, an increase in bond activity is likely because the governing statute requires that an owner or contractor’s Notice of Commencement filed in the Directory contain the name and contact information of any surety (that) provides performance or payment bonds and the applicable bond numbers. Given the difficulty of obtaining this information in private projects not registered in the Directory, and that a number of private projects registered in it comply with the statute’s surety disclosure requirement and include this information, it is reasonable to assume that unpaid suppliers, subcontractors, and the like made more bond claims in 2017 than in previous years.”
Don’t Ignore the Registry or Directory
Word of advice? Folks in Pennsylvania should be careful: “I didn’t know about the Directory.” isn’t going to save your lien rights. Yes, Pennsylvania’s Directory is new-ish and Iowa’s Registry certainly isn’t old (Utah’s SCR started in 2005!), but the law is the law… however gray or unknown it may be.
In Pennsylvania, statute dictates a mechanic’s lien be served by a sheriff. If the sheriff is unable to serve the lien, the lien claimant has an opportunity to meet statutory requirements by posting the lien “upon a conspicuous public part of the improvement.” The Superior Court of Pennsylvania says claimants must strictly adhere to statutory requirements. Learn more when you read Serve Mechanic’s Lien via Sheriff or Publicly Post It.
NCS Webinars & Events
Here’s a glance at our upcoming webinars!
- States Offering Additional Remedy Through an Optional Notice (8/7 @ 1:00 pm)
- Keeping Your Money: A Creditor’s Guide to Defending Preference Actions (8/14 @ 1:00 pm)
- Lien Foreclosure (8/21 @ 1:00 pm)
- Secured Transactions in the U.S. and Canada (8/28 @ 1:00 pm)