Yes. There seems to be common misconception that a contractor, subcontractor, or supplier, has six months from its last day of work on the project to file a mechanics lien. I frequently see mechanics liens whereby the claimant states “Claimants last day of work on the project was X.” However, Section 1502 (49 P.S. Section 1502) of the Pennsylvania Mechanics Lien is clear that a lien must be filed within six month of “the completion of his work.” Under the Lien Law, “completion of the work” is a defined term and means “means performance of the last of the labor or delivery of the last of the materials required by the terms of the claimant’s contract or agreement, whichever last occurs.”
This distinction is significant because it means a contractor, subcontractor, or supplier must complete all of the scope of work in its contract before it files a mechanics lien. This also means that a contractor, subcontractor, or supplier must continue to work even if it is not being paid in order to maintain its lien rights.
The Superior Court has spoken on the issue and made this very clear. In Philadelphia Const. Servs., LLC v. Domb, 2006 PA Super 184, ¶ 18, 903 A.2d 1262, 1268 (Pa. Super. Ct. 2006) (full disclosure I represented the owner-appellant in this case and argued that a contractor needed to complete all of its work before it filed a mechanics lien), the Court held that a contractor must complete its work in order to perfect its mechanics lien rights, even if the contractor is not getting paid. As the Court held, the Lien Law “mandates an aggrieved subcontractor must serve preliminary notice prior to “completion of the work” and then finish the job so they can perfect the lien within four months of “completion of the work.”” The Court recognized that “such a mandate may seem fundamentally unfair because it forces a subcontractor to render full performance even when the other party already has breached the contract in order to be afforded the remedy of a mechanics’ lien.” However, the Court also recognized the uniqueness of a mechanics lien, calling it an “extraordinary remedy” and, therefore, opined that the result was reasonable.
The takeaway? From an owner’s perspective, if a contractor or subcontractor walks off a job because of non-payment (as was the case in Philadelphia Construction Services) and file a lien, preliminary objections should successfully strike the lien. From the contractor’s perspective, you have to make the Hobbesian choice of working for free to perfect your mechanics lien rights or walking off the job and pursuing an ordinary breach of contract claim.