Amendments to Pennsylvania’s Mechanics’ Lien Law that took effect on Dec. 31, 2016 have new implications for owners, contractors and subcontractors. The requirements are a result of Act 142, which was passed in 2014 to establish a procedure for construction personnel to follow and a statewide web database (the Pennsylvania State Construction Notices Directory) where notices under the Mechanics’ Lien Law can be filed.

No owner is obligated to register a project on the Directory. Only certain owners have the right to use it, because these amendments apply only to residential and commercial construction, repair or improvement projects totaling $1.5 million or more.

Owners of an eligible property do have an incentive to register projects. Contractors on registered projects now have additional duties, and subcontractors must take certain actions beyond what they currently do to preserve their lien rights or they forfeit their right to file liens for the services or materials they provide.

REQUIRED NOTICES

• Notice of Commencement: Required to be filed and posted by the project owner or its agent prior to the beginning of work or the furnishing of materials for the project. The owner and contractor must make “reasonable efforts” to ensure a copy of the Notice of Commencement is included in contract documents provided to subcontractors awarded work on the project.

• Notice of Furnishing: Required to be filed by subcontractors to preserve their lien rights. A Notice of Furnishing must be filed with the Directory within 45 days after first working at or providing materials to the job site. A subcontractor failing to timely file a Notice of Furnishing waives its right to file a lien claim except in the event the subcontractor can prove its failure to file resulted from the owner or general contractor pressuring the subcontractor NOT to file, which can lead to civil or criminal action against the owner or general contractor.

The legislation includes two other types of notices (Notice of NonPayment and Notice of Completion) that can be registered in the Directory, but neither is required, nor has any substantial legal effect.

All affected parties should have their contract documents reviewed to ensure they are in compliance with the new amendments. Notably, the new amendments require specific notice language to be included in all contracts used on projects registered with the Directory. As outlined above, failure to comply could have significant consequences and create exposure to unanticipated liabilities.

For more information about the new Pennsylvania Mechanics’ Lien Law changes for 2017, or any other Construction Law matter, please contact Joshua Lorenz.

This material is for informational purposes only.  It is not and should not be solely relied on as legal advice in dealing with any specific situation.