PENNSYLVANIA’S MECHANICS LIEN LAW
by
Dominic A. DeCecco

The 2006 Amendments to Pennsylvania’s Mechanic’s Lien Law (“Lien Law”) that went into effect January 1, 2007 represent the most significant changes to the Lien Law since it was enacted in 1963.  The changes to the Lien Law will impact residential and commercial property owners, contractors and subcontractors, lenders and insurers.

The most radical change in the Lien Law is that, for non-residential construction, and for residential construction where the contract amount is one million dollars or higher, waivers by contractors in favor of owners without payment are considered “against public policy, unlawful and void.”  This rule also applies to waivers from subcontractors to contractors, except where the contractor posts a bond that guarantees payment for labor and materials.

Additional changes of significance include: (1) Mechanics liens are now subordinate to purchase money mortgages and open-end mortgages that are used to finance construction or improvements; (2) an additional tier of potential claimants has been added to the Lien Law, which grants rights to subcontractors and their suppliers; (3) there is no longer a requirement to issue a “preliminary notice” by subcontractors that perform alterations and repairs; and (4) the time for filing a claim under the Lien Law has been extended to six months.

For further information, contact Dominic A. DeCecco in the Banking and Creditor Rights Department.