Anyone familiar with mechanics liens are well aware that a valid mechanics lien is a process, and Pennsylvania is no exception. There are specific notices and deadlines that must be strictly met in order to have a valid, “perfected” lien claim. If not, the claim is susceptible to a challenge by the property owner.
A recent case out of Pennsylvania discussed such challenges, and the issue went all the way to the state Supreme Court, which ultimately held that an unperfected lien can be challenged at any time — even five years later.
Perfecting a PA mechanics lien claim
Generally, the lien filing process in Pennsylvania for subcontractors requires four steps:
- Send a Notice of Intent to Lien on the owner 30 days prior to filing the claim
- File the claim within six months of the claimant’s last date of furnishing labor and/or materials to the project
- Serve notice of the filing on the property owner within one month of filing
- File an affidavit of service of the notice with the prothonotary 20 days after service.
Each step presents its own unique challenges, but they must be strictly followed in order to perfect a mechanics lien claim.
For a full breakdown of the process: How to File a Pennsylvania Mechanics Lien | A Step-by-Step Guide
Take, for example, a recent case out of the PA Supreme Court, where a subcontractor followed these steps, released their claim, but then refiled.
However, when filing the second claim, they failed to file an affidavit of service. This case also touches on when objections to the validity of claims can be raised in instances like this.
Let’s take a closer look at what happened.
Subcontractor fails to file an affidavit of service
The case in question is Terra Firma Builders, LLC v. King.
- Owners: William and Melanie King (Kings)
- Represented by: Rocco P. Imperatrice & Andrew Stafford of Lamb McErlane, PC
- General Contractor: Terra Firma Builders, LLC (Terra Firma)
- Represented by: Paul A. Bucco & David S. Makara of Davis Bucco Makara & Dorsey
The Kings had hired Terra Firma to perform work on their home in 2012. About seven months after construction began, Terra Firma was removed from the project before completion due to disputed work performed.
In response, Terra Firma filed a mechanics lien claiming $131,123.24. The claim was properly served on the Kings, and Terra Firma filed an affidavit of service in a timely fashion.
For reasons that are unclear from the opinion, Terra Firma voluntarily discontinued its claim — but 6 days later, filed another claim for the same amount. This time, however, Terra Firma failed to file the required affidavit of service for the new claim. An enforcement action was eventually filed by Terra Firma, and the Kings did not file any objections in response.
Flash forward almost five years later, the Kings filed a petition to strike the lien claim for failure to file an affidavit of service. The trial court granted the motion, and the lien claim was struck because the claim wasn’t properly perfected.
Terra Firma appealed to the Superior Court and the decision was reversed. Then the Kings appealed, and the case made its way into the PA Supreme Court.
Supreme Court sides with Kings, deciding the right to object was not waived
Terra had conceded that they indeed did not file an affidavit of service after filing their second claim.
However, their argument was a procedural one. Terra contended the Appeals Court was correct in determining that since the Kings had waived their ability to challenge the validity of the claim by failing to object “preliminarily,” under 49 P.S. §1505:
“In doing so, the court essentially determined a lien claimant who fails to perfect its lien may nevertheless enforce judgment on it, if the owner does not file Section §505 ‘preliminary objections’ despite the statute’s explicit commend that failure to object ‘preliminarily shall not constitute a waiver of the right to raise the same defense in subsequent proceedings.”
Their reasoning was that this same defense may be raised in a “subsequent proceeding,” but since an enforcement action is subject to the Rules of Civil Procedure such defenses must be raised pursuant to those rules. Specifically under Pa. R.C.P. §1032, which states that a “party waives all defenses and objections which are not presented either by preliminary objection, answer or reply.”
The Supreme Court disagreed. The language of §505 of the lien statutes is unambiguous and clear; failure to object preliminarily “shall not constitute a waiver of the right to raise the same defense in subsequent proceedings.”
Using a strict interpretation of the statutes, there is no indication of any time limitations to bringing such objections. Also, following the “strict interpretation approach,” failure to timely file an affidavit of service results in an invalid claim. The court stated:
“We recognize that mechanics’ liens are a powerful statutory tool for the protection of valid secured property interests, and when they are correctly obtained and enforced, they provide a priority position for contractors while curtailing the property rights of owners. Given these high stakes, it is vital that the lien claimant strictly comply with the mandatory statutory requirements expressly set forth in the Law to prevent potential abuse.”
To summarize, Terra Firma’s lien remained unperfected and invalid. Nothing in the applicable statutes specifies a time for objecting.
Although objecting early on is the advisable (not to mention cheaper and less time-consuming) option, this does not operate to waive such objections. Accordingly, the Superior Court’s decision was reversed.
Basically, the Supreme Court refused to affirm a decision that would support the conclusion that unperfected liens could be enforced. Which, in the Supreme Court’s own words, is an “absurd result.” We reached out to Andrew Stafford, the attorney who represented the Kings on appeal, and this was his takeaway from the decision.
The Pennsylvania Supreme Court’s majority opinion is a strong reminder that perfecting a mechanics lien is essential,” Stafford said. “Anyone in the construction industry who wishes to obtain a mechanics’ lien in Pennsylvania must ensure not only that timely notice of claim is given to the property owner, but also that proof of notice, via an affidavit of service or acceptance of service, is timely filed. If not, no judgment can be obtained on the mechanics’ lien, and the lien can be stricken at any time.