After years with little to no change, the legislature in Pennsylvania has spent a good amount of time making revisions to the Mechanic’s Lien Law recently. Just last year we reported on amendments being considered; and more changes are being proposed to the statute as the General Assembly begins its 2013 session.
House Bill 473 was introduced by 13 representatives in an effort to add several definitions and create a requirement that a notice of furnishment be filed in order for a contractor or subcontractor to preserve its lien rights in certain circumstances. The concept, which has been used in other jurisdictions, would create an affirmative obligation on a contractor to preserve its lien rights at the beginning of its work for the first time in Pennsylvania.
The heart of the statute creates a State Construction Notices Directory to be administered by the Department of Labor and Industry. Keeping the directory can be contracted out to a private third party administrator and would be up and running by 2015. Under the new construct, an owner may post a “Notice of Commencement” with the State Construction Notices Directory to include project specific information that is commonly required to file a mechanic’s lien claim. Among the things included in the notice would be the name of the record owner of the property, a legal description of the property, and for whom the work is being performed.
If, but only if, the owner posts a Notice of Commencement, any contractor or subcontractor wishing to preserve its right to assert a mechanic’s lien claim must monitor the State Construction Notices Directory for notices of commencement and file its own “Notice of Furnishing”. Notices of Furnishing must be filed within 20 days after a contractor first performs work or services in furtherance of the improvement. The Notice of Furnishing must be served by certified mail or personally with an acknowledgement of service and the filing of the same notice in the State Construction Notices Directory. If the Notice of Furnishing is timely filed, all lienable work performed by that contractor can be included in the mechanic’s lien. If it is untimely, only work from 20 days before the Notice of Furnishing and thereafter is lienable. If no Notice of Furnishing is filed, lien rights are lost. Finally, the Notice of Furnishing requirement is not waivable.
This legislation has a ways to go before it becomes law and it is likely to be changed further as part of the legislative process. Initially, however, the creation of an affirmative duty on a contractor to preserve its lien rights at the front end of a job seems an overly burdensome approach to the lien law. Moreover, the practical effect of notice of furnishing requirements in other states has been to create distrust between owners, contractors, and subcontractors. Finally, government involvement in this process seems needless given the slow nature with which the government does almost everything. Other states that have required such pre-work notices have done so without the government being the central gathering point.
We will monitor this bill and keep you updated.
