Mechanics’ Liens and Arbitration Clauses

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Mechanics’ lien laws can give contractors, subcontractors and suppliers significant leverage in nonpayment situations. Before the 2007 Amendments to the Pennsylvania Mechanics’ Lien Law, there were conflicts between the procedural rules for enforcing the lien and typical arbitration provisions found in construction contracts. For example, a complaint to enforce the lien must be filed in county court within two years of the date the lien is filed and judgment must be achieved within five years. The resolution of disputes under arbitration clauses often contain shorter time periods. Also, no counterclaims and no joinder of other causes of action are permitted in a mechanic’s lien enforcement proceeding. See 49 P.S. § 1701(e) and 1702. However, typical arbitration clauses require any and all claims to be brought at the same time.

The purpose of the 2006 amendments to the Pennsylvania Mechanics’ Lien Law was to provide greater protection to subcontractors who, prior to the amendments, often had their rights waived before they signed a contract to work on the project. The best expression of the intent of these amendments can be found in the language of the statute. “A waiver by a contractor of lien rights is against public policy, unlawful and void. . .” unless certain express conditions are met. See 49 P.S. § 1401(2). Given the language of the statute and the spirit of the amendments, it is apparent that a Court not an arbitrator determines the validity of the mechanics lien and that an arbitration clause inconsistent with the statute cannot force the parties into an arbitration forum. Be advised, however, that mechanics’ lien laws of other states vary significantly. Therefore, it is essential to evaluate the laws of the state where the project is located to determine whether there is an enforcement conflict between the state’s laws and a mandated arbitration proceeding.

Wayne S. Martin, who is part of Reager & Adler’s Litigation Group contributed this article. He holds a B.S. in Civil Engineering from the University of Pittsburgh and a J.D. from the Widener University School of Law. Prior to passing the Bar, Wayne was a licensed Professional Engineer. Wayne’s practice focuses on all aspects of civil litigation, construction law, employment law, zoning and land use, and debt recovery law. He may be reached by calling (717) 763-1383 or via email at WMartin@ReagerAdlerPC.com.

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