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Pennsylvania Mechanic's Lien Statute is Settling In

By Kristin Alford

Pennsylvania Mechanic’s Lien Statute is Settling In

As the new Pennsylvania mechanic’s lien statute starts to settle in to its “new home” (i.e. notice directory), legal experts are beginning to weigh in on the benefits this directory could ultimately provide, as well as its remaining uncertainties.
 
According to Pennsylvania Mechanics’ Lien Law Amendments for Dummies, from Pietragallo Gordon Alfano Bosick & Raspanti, LLP, there are benefits to most parties within the contractual chain:

  • “Owners can protect against paying a general contractor and thereafter facing a mechanics’ lien claim by a subcontractor who has not been paid in full by the contractor;

  • General Contractors will benefit by having second-tier subcontractors identified and with this knowledge might be able to avoid defending and indemnifying the owner from a mechanics’ lien claim from a sub-subcontractor;

  • Subcontractors and suppliers will benefit because owners will provide payment bond information in the Notice of Commencement.”

 
In Pennsylvania State Construction Notices Directory is Now Available, Danny Cerrone, Jr., attorney with Clark Hill PLC, reminds claimants that, even with the notice directory, serving a formal notice and filing the mechanic’s lien are still required to preserve lien rights. 

“a subcontractor may file a Notice of Nonpayment when payment is not received. The failure to file the Notice of Nonpayment does not impair lien rights, nor does the Notice of Nonpayment relieve a subcontractor from its obligation to comply with the requirements to perfect a mechanics’ lien.

It is important that subcontractors/suppliers remember that they must still serve formal notice and file a mechanics’ lien, as required by the Lien Law.”
But it’s not all sunshine and roses–as attorneys with Reed Smith LLP explain in How the 2017 Pennsylvania Mechanics’ Lien Law Changes May Affect Your Business and Challenges in Its Application, there are several remaining uncertainties.

  • “Is a Notice of Commencement required (or advisable) for a project that was commenced prior to December 31, 2016?

  • Are ‘soft costs’ to be included in the $1.5 million threshold calculation?

  • Does the Act’s definition of ‘Contract‘ include all purchase orders and other contractual vehicles for purposes of flow-down clauses?

  • How does a Project Owner ensure that prime contractors and subcontractors incorporate the required statutory notice disclaimers in their lower tier contract documents?

  • Is a Notice of Commencement advisable when a Project Owner has required the posting of a payment bond and timely filed a no-lien agreement?

  • Is it advisable for project financing parties to require a Notice of Commencement when an open-ended mortgage has priority over mechanics’ liens on a project?”

In other words, as with anything new, it will take time to sort out PA’s new statutory requirements; but in the end, it could be a great thing for construction in Pennsylvania!
 

New from NCS

Blog – 3-in-3 Lien on Leasehold Interest
Read this post for answers to the following questions:

  • What is a lien on leasehold interest and how does it differ from a mechanic’s lien on real property?

  • How would I know if my project is a leasehold situation? And what happens if I file a lien and don’t realize it’s a leasehold?

  • What if it’s unclear if the owner is a private or public entity?

 
Infographic – Lien Waivers: More Than Just a Piece of Paper
Take a look at this infographic, to learn more about lien waivers, plus a list of the states that have specific waiver requirements!
 

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