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Can i waive my lien rights on a building that will be a store and apartment building (mixed use) in a independent contractor services agreement in Pennsylvania

PennsylvaniaLien Waivers

I did work on a building that will be used for commercial and apartments and cannot get paid. I signed an independent contractor agreement that had a provision waiving my lien rights but i heard that you cannot waive lien rights in a contract in Pennsylvania.

1 reply

Oct 9, 2018

This is a great question. First, as you may know, lien rights may be waived by contract for some projects in Pennsylvania. Specifically, under § 1401 of Pennsylvania's lien statute, "A contractor or subcontractor may waive his right to file a claim against residential property by a written instrument signed by him or by any conduct which operates equitably to estop such contractor from filing a claim." While a property does include some residential space, that does not necessarily make the entire property "residential". However, § 1401(b)(2) leaves non-residential lien waivers ineffective when made prematurely: "a waiver by a subcontractor of lien rights is against public policy, unlawful and void, unless given in consideration for payment for the work, services, materials or equipment provided and only to the extent that such payment is actually received, or unless the contractor has posted a bond guaranteeing payment for labor and materials provided by subcontractors." For a little more clarity on what constitutes "residential property", § 1201 of the Pennsylvania mechanics lien statute defines the term as "property on which there is or will be constructed a residential building not more than three stories in height, not including any basement level, regardless of whether any portion of that basement is at grade level, or which is zoned or otherwise approved for residential development on which there is or will be constructed a residential building not more than three stories in height..." with a few more details thrown in. So, first off, if a building will include some residential use - if that building is greater than 3 stories, a lien waiver executed in a contract prior to work was performed would be invalid. Further, property that is both commercial and residential is most typically referred to as "mixed use" rather than "residential property". In fact, because there was some confusion as to whether premature lien waivers would be effective on mixed-use properties, it appears that the 2009 amendments to Pennsylvania's mechanics lien laws altered the lien statute to more clearly prohibited premature lien waivers on mixed-use and large properties. Of course, There could be some room for interpretation there - so if a mixed-use property is under 3 stories tall, it may be helpful to consult with a local construction attorney to perform a more in-depth review of the project to determine whether it might be considered "residential property". However, if based on the above information the project is clearly not residential property, a lien waiver executed prior to the performance of work will not prohibit a claimant from filing a mechanics lien.

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