There was some exciting developments in Pennsylvania’s mechanic’s lien laws last week, as the Superior Court issued an opinion about whether “site work” qualifies for mechanic lien rights and the House Labor & Industry Committee considered a bill that would reduce the lien period and require additional notices. The two actions are unrelated, but both are discussed in this post.
Site Work Does Qualify for Mechanic Lien Rights
As I’ve written previously, it is very important to understand just who can and cannot file a mechanic’s lien. Each state restricts which work qualifies for the lien rights. Check out this post for a quick overview of this problem: FAQ: What Work Qualifies Me To File A Mechanic’s Lien?
In Pennsylvania, the Mechanic’s Lien Law establishes that a lien may be filed for work “when such work is incidental to…erection, construction, alteration or repair.” 49 P.S. §1201(12)(a). As explained by Fox Rothschild’s Construction Law Blog, this language made it “unclear…if a contractor performing site work to property (or similar work) could file a mechanic’s lien against that property.”
The Pennsylvania court ruled that site work does qualify for mechanic lien protection, regardless of whether the planned work is completed or not:
[W]e decline to equate the phrase “incidental to the erection [or] construction” with the requirement that a structure actually exist, particularly where, as here, excavation clearly was performed in preparation for planned construction…
..[W]hen excavation and related site work is performed as part of a “continuous scheme to erect” a structure, the Mechanic’s Lien Law would permit the lien to attach.
Read the full text of the court’s opinion (and the dissent) in B.N. Excavating, Inc. v. PBC Hallow-A, L.P. and PBC Hollow-B, L.P., No. 1704 EDA 2010, 2011 PA Super 120.
Pending PA Bill Will Shorten Lien Period and Increase Notice Burden
Pennsylvania is considering a change to its Mechanic’s Lien Law with House Bill 1602, which would reduce the lien period from six months to four months, and would increase the notice burden on contractors and suppliers. As reported by Construction Law Signal, the bill was considered last week by the state’s House Labor and Industry Committee…and according to the author there, would have “negative implications for the construction industry as a whole.”
Prime sponsored by Rep. Killion, the bill would allow property owners or prime contractors to file a Notice of Commencement at the start of construction. If the notice is filed, those who did not contract with the property owner would be required to serve a “Notice of Furnishing” within 20 days of first furnishing labor or materials to a project. This notice provision is very similar to notice requirements elsewhere in the United States.
In addition to substantially altering the notice scheme in Pennsylvania, there is another tiny – but important – change proposed by the bill. If it becomes law, HB 1602 would reduce the lien period for all claimants from 6 months to 4 months after completion of the work.