The Pennsylvania House and Senate ended their 2014 session at the end of last week without passing any bills that deal directly with construction related issues. There was one, however, which was under consideration and is worth watching when the legislature returns to Harrisburg.
House Bill 473 has lingered around since 2013. The bill proposes a somewhat radical change to the Pennsylvania Mechanic’s Lien Law by creating a statewide notice directory which contractors will be required to use in order to preserve lien rights on certain projects.
The bill begins by deleting the long used definition of “owner” and replacing it with a term called “searchable project owner”. Interestingly, this revision seems to dispense with the traditional definitions of an owner and, theoretically, calls into question the entire construct of the Mechanic’s Lien Law. It then adds definitions for “searchable project”, “construction notice”, notice of commencement”, and “notice of furnishing” among others.
The heart of the proposed revision is a directory to be maintained by the Commonwealth on the internet. “Searchable projects” – which are defined as erection and construction or alteration and repair work costing a minimum of $1.5 million – would require the filing of notices of furnishing. The failure of a contractor or subcontractor to file the appropriate notices under the statute would result in waiver of that contractor’s lien rights.
More specifically, project owners or their agents may file a notice of commencement on a searchable project. The statute provides for certain information to appear in notices of commencement and requires that the notice be posted in a conspicuous place at the project site. In all cases where a notice of commencement is filed by the owner, all subcontractors are required to file a notice of furnishing within 45 days of starting work in order to preserve lien rights. The statute also lays out the specific information that is to appear in this notice; and failure to provide the notice or include the proper information would result in waiver of the subcontractor’s lien rights since the Mechanic’s Lien Law is given strict construction by Courts. Owners may also, but are not required, to file a notice of completion to which contractors and subcontractors can respond by filing a notice of non-payment. This final notice does not meet the formal notice requirements otherwise imposed by the statute to preserve lien rights.
Finally, the statute makes it unlawful for owners or general contractors to ask that subcontractors refrain from filing the appropriate notices in the registry. It creates a separate civil cause of action for cases where this is done and imposes possible criminal sanctions.
While this change to the Mechanic’s Lien Law would only impact large projects, it is undeniably a radical departure from the current state of affairs. It adds a great deal of red-tape for contractors and subcontractors; and it is yet another way to be deprived of the right to lien for failure to follow protocol. It’s likely that further revisions will be made to the bill before it is offered in the next legislative session, but if it stays close to its current form it is worth tracking as a major change to the law.