Governor Corbett signs Mechanic’s Lien Law Amendment

The Pennsylvania Mechanic’s Lien Law, which was initially passed in 1963, has undergone few significant changes since its passage.  On July 9, 2014, the Governor signed Act No. 117 of 2014, previously known as Senate Bill 145, which significantly changes the Mechanic’s Lien Law with respect to residential properties and the rights of subcontractors to file mechanic’s liens. 

In recent years, many members of the Pennsylvania legislature have become concerned after hearing stories about Pennsylvania residents having mechanic’s liens placed on their residential properties by subcontractors who had gone unpaid for work performed on their residences, despite the fact that the homeowners had fully paid their contractor.  In most instances homeowners had no idea that their contractor had hired subcontractors.  Or, even if they did, they had assumed that their contractor was paying its subcontractors.  Heretofore, subcontractors had the right to place mechanic’s liens on residential properties if they had not received full payment for their work even though the residential property owner had already paid the contractor in full.  Thus, in a situation where the residential homeowner’s contractor did not pay its subcontractors, despite having been paid in full, it was not uncommon that residential property owners found themselves in effect paying twice for work done on their homes.  The authors of the legislation amending the Mechanic’s Lien Law have stated that the purpose of the amendment is primarily to protect residential property owners from being victimized by unscrupulous business practices of contractors who failed to pay subcontractors leaving residential property owners subject to liens due to no fault of their own.  Under the amendment, subcontractors will be barred from asserting a mechanic’s lien if the residential property owner has fully paid its contractor.  If the residential property owner has not fully paid the contractor, a subcontractor may still file a mechanic’s lien claim, but the amount of the lien will be limited to the difference between the contract amount between the residential property owner and the contractor and the amount paid by the residential property owner  to the contractor. 

The amendments to the Mechanic’s Lien Law become effective 60 days from its passage.  Anyone with questions regarding this new amendment to the Mechanic’s Lien Law of 1963 is welcome to contact Reager & Adler. 

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