Pa. Mechanics’ Lien Law Update

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I’m a member of council for the Allegheny County Bar Association Construction Law section, and we had an interesting discussion yesterday about a proposed bill to change portions of the Mechanics’ Lien law.

Subcontractors must keep an eye on the law and understand how to comply, otherwise they could lose their rights to file a lien for nonpayment.

Simply put, the law (House Bill 473 in its current form), would authorize creation of a website where owners would initiate an online “Notice of Commencement” process to “identify” the universe of subcontractors working on projects.  To be fair, I’ve seen many projects where there are many layers of subs and owners might never know who all is working on the job — unless something goes wrong.

The proposed website would be called a “State Construction Notices Directory.”  An owner would have to file on the Directory — prior to the commencement of work or furnishing of materials for an “improvement” — a listing of information including: (1) name, address and telephone number of a contractor; (2) and name, address and email address of the legal owner of the property.  The owner would also have to conspicuously post a copy of the notice at the project site at the time that the physical work commenced.

Here’s where subcontractors need to be cautious…

If the owner files a Notice of Commencement (it would be optional for the owner to use the website as the law currently is written), then a subcontractor would be required to file and serve a “Notice of Furnishing” on the owner 20 days after first performing work or first providing materials AS A PRECONDITION TO RETAIN LIEN RIGHTS.  The Notice of Furnishing would have to be served upon the owner: (1) via certified mail to the owner’s address; (2) personal delivery to the owner; and (3) filing of the notice on the proposed web site.

This means a contractor’s failure to file and properly serve a Notice of Furnishing can result in a complete barrier to filing a mechanics’ lien.  Any time a law is written this way, you can assume that notice and service requirements will be strictly applied and any failure, regardless of how slight, to follow the letter of the law will result in a waiver of rights.

It is expected that there will be more public hearings on this issue, according to a memorandum by Representative Thomas Killion (R-168) who sponsored the bill.

This proposed change is not unprecedented,  as several other states have similar requirements.  I had a case several years ago in Ohio involving a mechanics’ lien and compliance with a notice or commencement/notice of furnishing issue.  These requirements are neither forgiving nor are they optional once in place.

I will continue to follow the status of this bill and will post updates as they happen.

I would like to thank the attorneys of the firm of Meyer, Unkovic & Scott (of which I am a proud alum) for an excellent briefing on the topic.

Sina Cera