Changes In Pennsylvania

What changes were made in the October 14, 2014 amendments and when do they go into effect?

A State Construction Notices Directory will be created for posting Owner’s Notice of Commencement, Subcontractor’s Notice of Furnishing, Owner’s Notice of Nonpayment, and Owner’s Notice of Completion.  The system applies to projects costing at least $1,500,000, referred to as “searchable projects”.  Participation in the system is optional in the discretion of the owner.  An owner of a searchable project who wants to participate must file with the Directory and post at the job site a notice of commencement prior to commencement of labor, work, and furnishing of materials, providing certain categories of information about the project.  If a searchable project owner makes the required filing and posting, a subcontractor who fails to file a notice of furnishing within 45 days after commencing work loses all rights to file a mechanics’ lien with respect to the project.

The State Construction Notices Directory will become operational on December 31, 2016.

What changes were made in the July 9, 2014 amendments and when did they go into effect?

To counter Commerce Bank/Harrisburg N.A. v. Kessler, 46 A.3d 724 (Pa. Super. 2012), the construction loan priority provision was clarified to provide that open-ended mortgages have priority over mechanics’ liens where at least 60 percent of the proceeds are intended to pay or are used to pay all or part of the costs of construction.  A definition was also added for “costs of construction” that includes most of the expenses (soft as well as hard) that are incurred in a construction project.

Subcontractors no longer have a right to lien residential properties consisting of 1 or 2 dwelling units in a single building or townhouse where the owner or tenant has paid the full contract price to the contractor.

The changes in the July 9, 2014 amendments apply to liens perfected on or after July 9, 2014, even if the visible commencement of construction preceded that date.

What changes were made in the August 11, 2009 amendments and when did they go into effect? 

The term “residential building” was replaced with “residential property” which is defined 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, not including any basement level, regardless of whether any portion of the basement is at grade level, planned residential development or agricultural use, or for which a residential subdivision or land development plan has or planned residential development plan has received preliminary, tentative or final approval 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, pursuant to the act of July 31, 1969 (P.L. 805, No. 247), known as the “Pennsylvania Municipalities Planning Code.”

Advance waivers of lien for contracts to construct residential properties are not limited by a monetary cap on the total contract price.

The changes in the August 11, 2009 amendments went into effect on October 10, 2009.

Carl G. Roberts, Esquire (Contributing Author) – Ballard Spahr LLP

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