New Changes to Pennsylvania’s Mechanic’s Lien Law will Impact some Construction Projects
Amendments to the Pennsylvania Mechanic’s Lien Law, known as Act 142, which took effect January 1, 2017, spawned the Pennsylvania State Construction Notices Directory (“the Directory”) and new notice provisions. The new provisions will definitely impact construction projects costing a minimum of $1.5 Million and the process by which liens are perfected.
Now online and available at scnd.pa.gov, the Directory is a central database and searchable index of lien notices. The Directory applies to a “searchable project,” which is any private improvement contract consisting of erection and construction, alteration or repair, costing a minimum of $1.5 Million.
- Notice of Commencement: This is the tool by which a project is listed in the Directory and is designed to notify contractors, subcontractors and suppliers of labor and material about information relevant to lien rights. The Notice of Commencement must be filed prior to the commencement or the provision of any work, labor or materials to the project. If timely filed, it may protect against future mechanic’s lien claims. The Notice must include certain information, such as the name, address and email address of the contractor; the name and location of the project; a legal description of the property, and the number of the parcel on which the project is located; the name, address and email address of the project owner, surety and bond information, and the unique identifying number that is assigned to the Notice of Commencement. The owner must then post a copy of the Notice in a conspicuous place at the property prior to the commencement of work, and ensure that the Notice remains posted until the completion of the project. The owner must also make sure that the Notice is part of the contract documents provided to all subcontractors on the project.
- Notice of Furnishing: If the Notice of Commencement is properly filed and posted, then a subcontractor must file a Notice of Furnishing to preserve the subcontractor’s lien rights. The purpose of this is to inform the project owner of the subcontractors providing labor and material on the project. The subcontractor must file the Notice of Furnishing within 45 days after first performing work or delivering materials to the project. The Notice must also include certain information, such as a general description of the labor or materials furnished; the name and address of the person supplying the labor or materials; the name and address of the contracting party and the project description. Significantly, the failure to “substantially comply” with these requirements may forfeit the subcontractor’s lien rights.
- Notice of Completion: This is optional and for informational purposes. Given the short timeframe for filing mechanic’s lien claims, this Notice is useful for establishing an outside date for possible lien claims. It must be filed by the project owner, or its agent, within 45 days of the actual completion of work.
- Notice of Nonpayment: This is also optional and also for informational purposes and may be filed by subcontractors when payment is not received. The Notice does not relieve a subcontractor of its other obligations to perfect its mechanic’s lien claim under the lien law, including the requirement of submitting a timely, formal notice of intent to file a mechanic’s lien claim. However, it may be helpful in advising the project owner of situations where subcontractors are not being timely paid.
Owners: File the Notice of Commencement to take advantage of the protections to limit mechanic’s lien claims.
Contractors and Subcontractors: Timely compliance with the Notice of Furnishing requirements will be essential to preserve the lien rights. Contracts and subcontracts should incorporate and comply with statutory notice requirements.
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