The recent Pennsylvania Supreme Court decision in Terra Firma Builders, LLC v. King, 2021 Pa. LEXIS 1886 (Apr. 29, 2021) is yet another a cautionary tale for contractors and subcontractors seeking to enforce mechanics’ liens. The opinion highlights the procedural and statutory landmines waiting for unsuspecting contractors, subcontractors and their counsel who fail to strictly comply with each and every requirement of Pennsylvania’s Mechanics’ Lien Law. Ignorance of and failure to adhere to all of the requirements and deadlines in the Mechanics’ Lien Law likely will result in waiving the right to lien a property, one of the most powerful tools afforded to construction professionals. Conversely, the decision is welcome news for owners challenging a mechanics’ lien as it expands their ability to fend off claims filed against their properties.
The mechanics’ lien claimant, Terra Firma Builders LLC (“TF”), performed construction work at the Kings’ home. TF was either removed or pulled off the job after which it filed a civil action for breach of contract, as well as a mechanics’ lien seeking approximately $130,000. TF filed an affidavit of service in accordance with the Mechanics’ Lien Law, but voluntarily discontinued that first lien. Less than a month later, TF filed a second, identical lien against the Kings, but did not file the required affidavit of service.
Two years later, TF filed a complaint to enforce and obtain judgment on its lien. Three years after that, the trial court held a bench trial on the consolidated lien claim and the civil action. The judge ruled in favor of the Kings, but TF sought and was granted a new trial. The Kings again prevailed at the second trial. While post-trial motions were pending, the Kings filed a petition to strike the mechanics’ lien, raising for the very first time the issue of TF’s failure to file an affidavit of service to perfect the lien. TF argued that the Kings had waived their right to object to the 5-year old lien. The trial court granted the petition to strike the lien, which TF appealed to the Superior Court.
In 2019, the Superior Court found that the Kings waived their objection by failing to raise it before TF initiated the enforcement action. The Supreme Court granted review to consider the issue of whether a property owner who seeks to challenge the perfection of a mechanics’ lien is required to file preliminary objections before or during the enforcement proceeding of the lien.
Upon appeal by the Kings, the Pennsylvania Supreme Court reaffirmed that a mechanics’ lien is a creature of statute, and any question of interpretation must be strictly construed in favor of the property owner. Failure to comply with Pennsylvania’s Mechanics’ Lien Law invalidates a mechanics’ lien. TF’s failure to file the affidavit meant that the lien was not properly perfected, and that defect was not curable.
Against that backdrop, the Pennsylvania Supreme Court considered whether the Kings waived their objections to TF’s failure to file the affidavit of service when they failed to raise that argument until after two trials on the substantive merits of the claim. Recognizing that mechanics’ liens are a powerful tool for contractors that significantly impact a property owner’s rights, the Supreme Court found that it is “vital” that a lien claimant “strictly comply with the mandatory statutory requirements expressly set forth in the Law to prevent potential abuse.” The Supreme Court observed disapprovingly that despite the fact that the lien was fatally defective, the Superior Court’s decision nonetheless allowed TF to enter judgment and place the Kings’ home for sheriffs’ sale.
Ultimately, the Pennsylvania Supreme Court found that the Kings could assert their objection that TF failed to file the affidavit of service required by the Mechanics’ Lien Law – even though multiple trials on the merits already had occurred without this issue ever having been raised. The Supreme Court would not permit judgment to be entered on an invalid, unperfected lien, and remanded the case to the trial court for reinstatement of the order granting the King’s petition to strike.
This opinion gives further ammunition to property owners challenging mechanics’ liens, and serves as a warning to contractors and subcontractors that they must strictly comply with every requirement of Pennsylvania’s Mechanics’ Lien Law in order to be successful. Contact one of our Construction Group attorneys for help with your mechanics’ liens issues.
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.