The New Year will bring with it the biggest change to Pennsylvania’s Mechanics Lien Law since the current law was passed in 1963. These changes will impact owner, contractors, and subcontractors equally. However, the biggest benefits will probably be for real estate developers and other project owners.
On December 31, 2016, Pennsylvania will go live with a website known as the State Construction Notices Directory. On that date, owners will have the option of making projects costing $1,500,000 or more “searchable projects.” An owner makes a project a searchable project by filing with the Notices Directory a “Notice of Commencement” before works begins. The Notice of Commencement must include the name, address, and email address of the contractor, full name and location of the searchable project, the county where the project is located, a legal description of the searchable property, and the name address, and email address of the searchable project owner. Importantly, the owner must also post a copy of this Notice of Commencement at the project site.
If an owner does this, a subcontractor wishing to maintain its lien rights must file a Notice of Furnishing within forty-five (45) of first performing work on the project. The notice of furnishing must include the general description of the labor and materials provided, the full name and address of the person supplying the services or items, the full name of the person that contracted for the services, and a description of the searchable project.
The impact of these changes cannot be emphasized enough. First, subcontractors can no longer wait to take action in order to preserve their lien rights. This means no more waiting for your invoice to age a few months before filing a lien. The old rule that you have six months after completion of your work to file your lien no longer applies if you fail to act within 45 days of starting your work.
Second, owners need to diligent file the Notice of Commencement and post the Notice at the project. It is expected that many subcontractors (at least those that do not follow this blog) will not file a required Notice of Furnishing within forty-five days of beginning their work. That means if you – the owner – have filed the required Notice of Commencement you can bar a significant number of mechanics liens.
These rules only apply to projects beginning on or after December 31, 2016. But failure to understand these new rules going forward will have significant consequences to owners and subcontractors.