Legislative Update on Mechanic’s Lien Law of 1963
On July 9, 2014, Governor Corbett signed into law Senate Bill 145 (the “Bill”) providing amendments to the current Pennsylvania Mechanic’s Lien Law of 1963. Notably, the Bill provides relief for residential owners from mechanic’s liens on their residential property filed by subcontractors and/or material suppliers where the contractor was paid in full. The Bill does not change the ability to lien improvements to non-residential property (including investment properties) or the ability for a contractor to lien a residential property for lack of payment.
The Bill specifically states that a subcontractor, which definition includes any material provider or supplier, does not have the right to put a lien on a residential property where an improvement has been completed and the owner has paid the contract price to the contractor. In the event a subcontractor liens a residential property for lack of payment, the Bill permits the owner to discharge such lien by filing a petition or motion with the court and providing adequate proof the contract price was paid in full to the contractor. Where only a portion of the contract price was paid, the owner may still petition the court to have the subcontractor’s lien reduced to the unpaid portion of the total contract price. The Bill does not provide any penalties for subcontractors that file mechanic’s liens on residential properties where the owner has paid the contractor in full, likely because the subcontractor has no way to know if payment has been made.
Check back for updates on SB 145 and for other legislative updates concerning business and construction law. Questions or comments on this article or general construction law can be directed to Christian Miller at firstname.lastname@example.org or (717) 845-1524 ext. 121.