This blog is part of an ongoing series discussing the Pennsylvania Mechanics’ Lien Law. For more information on Mechanics’ Liens in Pennsylvania, click here.
Important changes to the Pennsylvania Mechanics’ Lien Law of 1963 became effective on the first day of 2007. A Mechanics’ Lien is a non-exclusive statutory remedy that permits certain contractors and subcontractors the protection of a lien against a property for amounts due and unpaid which are attributable to labor and/or materials used in a private construction project.
Prior to the effective date of the new law, property owners would often acquire a Pre-waiver of the potential lien claims of the contractor and subcontractors on a project. The new law, however, restricts a property owner’s ability to secure a Pre-waiver to situations in which the total contract price for a residential project is less than one million dollars. In the event that the residential project exceeds the one million dollar limit, a subcontractor can only effectively Pre-waive any liens if a contractor posts a bond with enough value to pay all subcontractors and materialmen. The bond guaranteeing payment to subcontractors is also required when the project is a non-residential project.
If the contractor or owner acquires a Pre-waiver from subcontractors in either of these cases where a bond is required for Pre-waiver, but does not post the bond, the Pre-waiver will not stop subcontractors’ Mechanics’ Lien Claims against the property. This new bonding requirement may present a significant economic challenge to general contractors, and should be factored into contracts in which the customer or property owner insists upon a Waiver of Mechanics’ Lien.
Additionally, the time period during which a contractor or subcontractor may file a Mechanics’ Lien Claim has been extended from four months to six months after completion of the contractor’s or subcontractor’s work. The last day that work has been performed at the project premises must be dutifully documented by the contractor or subcontractor who may wish to later file a claim in the event of non-payment, because a failure to file a Lien Claim within the six months required by the statute constitutes sufficient grounds for striking off the lien.
It should be noted that Mechanics’ Liens are considered non-exclusive “statutory creatures” that permit a claimant to begin litigation with a lien. Therefore, Pennsylvania Courts have always strictly construed the provisions of the Mechanics’ Lien Law, requiring that the Claim itself conform to the formal requirements of the law, and that service of Notice of the Mechanics’ Lien be technically correct and timely – if these strict legal requirements are not met, a Mechanics’ Lien Claim will be stricken off and rendered void.