We covered the coming changes to Pennsylvania’s Mechanic’s Lien Law at our most recent Seminar Series program. As a follow up to that presentation, the following is a primer on the coming changes.
(1) A new State Construction Notices Directory is being created for use on projects of $1.5 million or more. The directory will be a website that is operated by Pennsylvania’s Department of General Services and is presently scheduled to go live on December 31, 2016. It seems highly unlikely this date will be met at this point for a variety of reasons though.
(2) The amendments create 4 new types of notice permitted under the law: (a) notices of commencement; (b) notices of furnishing; (c) notices of completion; and (d) notices of non-payment.
(3) Notices of Commencement are filed in the State Construction Notices Directory for any project valued at $1.5 million or more at the discretion of the owner. The owner may delegate the task of filing the Notice of Commencement to the general contractor as a matter of contract. The notice must be filed in the directory and be posted at the project site before work on the project starts. The owner must also make a “reasonable” effort to make sure any Notice of Commencement is part of the contract documents. There is a proscribed form that must be followed for the notice to be effective.
(4) If a Notice of Commencement is filed, a Notice of Furnishing becomes mandatory for any subcontractor or supplier that has rights under the lien statute. The failure to file a Notice of Furnishing if a Notice of Commencement is filed will be deemed a waiver of lien rights. General contractors do not have to file a Notice of Furnishing because they have a direct contract with the owner. The Notice of Furnishing must be filed in the State Construction Notices Directory no later than 45 days after first supplying labor or materials to the project to be effective. Like the Notice of Commencement, there is a proscribed form that must be followed.
(5) Notices of Completion are filed by the owner (or the general contractor, if properly delegated) to mark the end of work on the project. These notices are entirely optional and must be filed within 45 days of actual completion of the work as defined in the statute. This notice cannot be used for any purpose other than to provide notice to those working on the project. For instance, it is expressly stated in the statute that it cannot be used for things like determining when the warranty period begins.
(6) A Notice of Non-Payment is filed by a subcontractor or supplier that has lien rights to indicate it has not been paid. It has no proscribed form, no time limit, and no legal effect on lien rights.
All of these new provisions will operate under existing case law which states that the Mechanic’s Lien Law is in “derogation of the common law” and must be strictly construed. In practical terms, this means that the failure to adhere to the requirements of the law very closely will result in the loss of lien rights and the lien being stricken.
We will continue to monitor the efforts of DGS to take the State Construction Notices Directory live and inform you as we learn more.