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By: Scott C. Hofer
In a change to the Pennsylvania Mechanic’s Lien Law of 1963 the Pennsylvania Department of General Services has opened the State Construction Notices Directory, which is now online and ready to accept lien-related notices. Pennsylvania has joined a trend in several states where Owners of significant construction projects may file notices with the State/Commonwealth in an effort to cut-off the lien rights of suppliers of labor and/or materials.
If a Pennsylvania project costs a least $1.5 million the owner may file a Notice of Commencement prior to the start of any labor, work or materials on a project. This document puts all suppliers of labor and/or materials on notice that they must file a document giving notice of the furnishing of that labor and/or materials promptly after beginning to do so. The Notice of Commencement is required to include the following: (1)the name, address and e-mail address of the (prime) contractor; (2) the name and location of the project (including the county); (3) a legal description of the property; (4) the tax identification number of the parcel(s) on which the project is located; (5)the name, address and e-mail address of the Owner; (5) surety and bonding information (if applicable); and (6) the identifying number assigned by the Department of General Services that was assigned concurrent with the filing the notice. Once the Notice of Commencement is properly filed the Owner must then post a copy of it in a conspicuous place at the property prior to the beginning of work and make sure that it remains posted until the work is completed.
Once the Owner has properly filed and posted a Notice of Commencement then any provider of labor and/or materials is required to file a Notice of Furnishing within 45 days of first providing work for, or delivering materials to, the project. If the provider of labor and/or materials fails to provide this notice within the timeframe required by the statute it loses its lien rights.
In addition to the required filings there are optional filings that may also be utilized. An Owner may file a Notice of Completion in an effort to establish an outside date for the filing of any lien claims. A supplier of labor and/or materials may utilize a Notice of Nonpayment to inform the Owner, Owner’s agent, contractor acting as the Project agent or the subcontractor of the nonpayment. This filing is for information purposes but can be utilized to put pressure on the party responsible for payment.
Suppliers of labor and/or materials also need to know that the directory notices do not do away with any of the preconditions that already exist to perfect a lien. For instance, a subcontractor or supplier to the (Prime) Contractor must still file a Notice of Intent to File Mechanic’s Lien within the time required by the Lien Law to preserve the right to perfect a lien when it is finished in addition to filing a Notice of Commencement within 45 days of beginning.
It is unclear what effect this change will have long-term. While the change provides Owners a mechanism to cut off the lien rights of the unwary, it also provides the essential information that have often led to additional costs in lien filings (such as property search costs). As a result, the law can trap the unwary but a time/cost-saver for the wise. As of April 1, 2017 thirty-nine (39) projects had been registered.
For additional information related to this change in the Pennsylvania Mechanic’s Lien Law of 1963 and for advice regarding how to navigate the various laws that impact contractors in the Commonwealths of Pennsylvania and Virginia, the States of New Jersey and Maryland and the District of Columbia you can contact Scott C. Hofer of the law firm of Freeman, Mathis & Gary, LLP at (267) 758-6023 or [email protected].