|June 27, 2013|
Previously published on June 20, 2013
As most contractors recall, the Pennsylvania Lien Law was modified in 2007 to reinstate lien rights. We have previously reported on proposed changes to the lien law and lien rights preservation. Additional proposed changes to the lien law, if passed, would have widespread impact across the industry. Pending Pennsylvania House Bill 473 seeks to amend the current lien law to create a State Construction Notices Directory. The Directory would be an online database providing extensive details of each registered project.
Owners and General Contractors would have access to a centralized, detailed list of subcontractors and sub-subcontractors.
HB 473 would only affect projects which are registered in the Directory. Owners would have the option to register a project by filing a notice of commencement. This notice would be available online and displayed at the project site. For all such registered projects, subcontractors and suppliers would be required to file notices of furnishing within 20 days of first providing work, services or materials in order to preserve lien rights.
Many owners are likely to take advantage of the new law to create an additional step for claim preservation and limit the pool of potential lien claimants. General contractors would not have additional requirements under HB 473. The law would give owners and general contractors access to a database listing all potential lien claimants on a job.
Subcontractors will be required to monitor notices of commencement and file notices of furnishing to preserve lien rights.
HB 473 requires subcontractors to locate notices of commencement and to file notices of furnishing within 20 days of first providing work or materials. Late notices of furnishing would result in forfeiture of lien claim rights for work performed more than 20 days before the filing of the notice.
One stated benefit of the law is that owners and contractors would be able to reconcile their payments with the list of subcontractors and suppliers registered on the Directory. This would help ensure that all such subcontractors, second tier subcontractors and suppliers have been paid. If adopted, the law would place an additional burden on subcontractors, who would need to vigilantly monitor notices of commencement and file timely notices of furnishing before starting work to avoid forfeiting lien claim rights.
HB 473 has potential to significantly impact mechanic’s lien claim rights in Pennsylvania because of the new notice requirements. However, it is still in the legislative process and further developments are expected.