when modifications to the lien laws occur during a construction project, which set of requirements apply? One thing that we mention frequently on this blog is that mechanics lien laws are seemingly in constant motion. Legislatures determine that there needs to be more protection for the property owner, or more protection for the contractor, and all of a sudden the deadlines to file, or the required notices have changed. These changes to law can have serious ramifications for lien rights, so when modifications to the lien laws occur during a construction project, which set of requirements apply?
Change is Constant in Mechanics Lien Law
One thing to keep in the back of your mind on every project is that lien laws are not static. While sometimes it seems like not much is changing in the law, there are tweaks that happen more often than one might expect. The relative frequency of these changes is what prompted us to have an entire section of the Lien & Credit Journal dedicated to keeping you informed, Lien Law Alerts. If reviewing the lien laws of every state in which you do business to check for substantive or procedural changes is not currently something you do – it may be worthwhile to check the Lien Law Alert section with some frequency, or to search the internet for changes to mechanics lien and/or notice requirements in states where you work.
If a Change Occurs, What Law Applies?
It is an inescapable fact that if a change to the mechanics lien law occurs, it will occur during the course of some project. There are always construction projects in progress, in various stages of completion. So, if you happen to be working on a project when a new requirement or new deadline goes into effect, which controls? Do you comply with the law that was in place when the project started, the law currently in place, both? And, on the other hand, if the new law offers you more protection or a longer time-frame, do you receive the benefit of the change if you have already started work under the previous requirements?
The answer, as I’m sure you have come to expect about mechanics liens, is that it depends. Generally speaking, and to be safe, if the law changes during a project and a new law imposes more requirements, it is the most prudent choice to attempt to comply with the new requirements (or if the old requirements were more onerous, to continue to comply with the old requirements). Obviously, this is not always possible. If a new requirement is to send notice to the property owner within 20 days of the first furnishing of labor and/or material, and you have been working for 40 days – this is a requirement that cannot be met. Usually, however, mechanics lien law changes are not specifically applied retroactively, and the contractor would not be forced to comply with the new notice requirement in the above example.
Sometimes, however, a change to the lien law can be a benefit to the potential lien claimant, and give rise to potential mechanics lien rights where none existed previously. That was the case recently in a Pennsylvania court decision. The recent decision of the Superior Court of Pennsylvania, decided October 1, 2013, relates to a change made to Pennsylvania’s mechanics lien law that went into effect on January 1, 2007. Prior to January 2007, a Pennsylvania lien claimant was required to file a mechanics lien within 4 months of last furnishing labor and/or materials to the project in question. After that date, Pennsylvania lien claimants were allowed 6 months in which to file their mechanics lien.
In the recent case, which also explored some other aspects of mechanics lien law that we won’t get into here, work was last performed in November of 2006, but the lien was filed in April of 2007. Under the lien law in place at the time the project was started, (and in this case, completed), the lien would have been required to be filed within 4 months from the November date of last work. However, as noted above the lien law changed on January 1, 2007 to extend the filing period by two additional months. One of the questions before the court was whether the lien claimant gained the benefit of the two additional months in which to file the lien claim.
The court noted that when the lien was filed the law stated that a lien claimant must “file a claim with the prothonotary as provided by this act within six (6) months after the completion of his work”. Since the lien filed in 2007 was filed after the law went into effect, and when it was filed the law provided that any lien filed “as provided by this act” was required to be filed within 6 months of last furnishing labor and/or materials, the court decided that the lien was filed in accordance with the law, and should not be rendered invalid because of the time at which it as filed.
Lien laws change all the time. Keeping an eye on laws that change during the course of a project is good business practice. When the laws do change, it may be up to a court to determine which laws apply – so it may be in a potential lien claimant’s best interest to comply with the most onerous requirements to best protect his or her lien rights. And, who knows, the change may grant you lien rights where there was previously only a missed deadline.