Home>Levelset Community>Legal Help>We filed a Lien Waiver in the State of PA, County of Centre. The GC has a bond on the property, he states the Lien is in violation of the law however, it appears that the Lein will transfer naturally to the bond due to the law in that state. Please advise. Job is Commercial Construction

We filed a Lien Waiver in the State of PA, County of Centre. The GC has a bond on the property, he states the Lien is in violation of the law however, it appears that the Lein will transfer naturally to the bond due to the law in that state. Please advise. Job is Commercial Construction

Lien Claim filed against project. GC's attorney states the Lien is outside of the law since there is a bond. When we asked the GC if there was a bond he refused to answer the inquiry. I could be wrong but research looks like the Lien will transfer to the bond on the property. Is that correct? Do I need to release the lien and file a claim against the bond?

1 reply

Nov 5, 2018

It can be frustrating to hear that a mechanics lien may not be available to secure the value of labor or material furnished to a project even when all the steps are taken correctly. That can be the case in some circumstances, though. Fixing that type of issue, (if anything needs to be fixed) can depend on the reasons why the lien is claimed invalid, and the specifics of any bond.

Pennsylvania is relatively unique in that it allows General Contractors to waive the mechanics lien rights of subcontractors on their projects in certain situations. GCs are allowed to waive lien rights of subcontractors on any project, if the general contractor posts a payment bond to cover the value of the labor and materials provided, and a filing giving notice is made with the prothonotary of the county in which the project property is located.

In order to disallow liens from being filed, the bond must be posted, and a stipulation against liens (or a copy of the direct contract stating the same) must be filed and properly indexed prior to commencement of work upon the ground, or within 10 days after execution of the principal contract, or at least 10 days prior to the contract with the subcontractor. If this is done, no lien rights exist for the subcontractors ion the project, and any security for payment would be the contractor's payment bond upon which the subcontractor would need to initiate a claim.

Besides a general prohibition of subcontractor's lien rights, a lien may also be "bonded off" to remove the underlying property. In this case, an already filed mechanics lien can be removed from the property when cash or a bond is substituted as security. In this case, the claim against the property is transferred to a claim against the substituted security.

Generally, however, it doesn't hurt to make a formal claim against a bond when it is known that a bond is available; against which a claim could be made.

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