Last month, the Construction finance Journal noted that Pennsylvania has been a hotspot for proposed mechanics lien changes. These changes and potential changes considered whether union workers should be classified as employees or subcontractors, examined the question of “unfair” liens as related to Pennsylvania being a “full-price” or “unpaid balance” lien state, and contemplated the creation of a State Construction Notices Directory.
The most recent contemplated changes, contained within HB 473, proposed the creation of s state-wide electronic centralized notice database, and created some new burdens for Pennsylvania’s subcontractors. This modification to the Pennsylvania mechanics lien law scheme has been passed as Act 142.
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Act 142 and New Pennsylvania Law
This modification to the Pennsylvania mechanics lien law scheme has been passed as Act 142. The changes to Pennsylvania’s mechanics lien law set forth by Act 142 become effective on December 31, 2016. While this effective date is more than two years away, it is still an ambitious deadline. The chief change is the creation of an electronic centralized notice database, through which property owners may register their property/project prior to the commencement of work – this is not an insignificant task. The creation of the database will result in an affirmative duty of the subcontractors on registered construction projects to monitor the notice database, and to provide a preliminary notice of furnishing within 20 days of their first furnishing in in order to protect their right to file a valid mechanics lien. This requirement is very similar to the 20-day preliminary notice required in California and Arizona, even down to the fact that tardy preliminary notice may be given, but is only effective to work provided in the 20 days prior to giving the notice (and thereafter).
Other, purely informational, purposes are contemplated for the electronic notice database. This will take some getting used to for Pennsylvania construction participants. While it is hoped that the electronic repository will provide some clarity, that seems an ambitious, and potentially unlikely result. The electronic directory is only available for projects of more than $1.5 million, and registration is optional (at the discretion of the property owner). The likely piecemeal adoption of the database may cause some growing pains, and at least in the short term, even add to the notice confusion in Pennsylvania.
Nevertheless, construction industry participants in Pennsylvania should familiarize themselves with the new requirements, in preparation for the December 31, 2016 effective date. If anything changes between now and then, the Construction Payment Blog will keep you informed.