Construction Law Blog

Mechanics’ Liens: Is a Move to the Ohio Model on the Way?

Currently pending before the Pennsylvania Senate Labor and Industry Committee, House Bill No. 1602 (the “Bill”), if and when enacted, would add new notice requirements to the Lien Law. The majority of the Bill focuses on the creation of a new lien notice system for project owners and subcontractors to follow. In order to manage and facilitate the new notice requirements, the Bill calls for the creation of a “State Construction Notices Directory” (“Directory”) website by July 1, 2013. The Pennsylvania Department of Labor and Industry will be responsible for the Directory. The Directory will serve as the database for owners to file a “Notice of Commencement” and subcontractors to file a “Notice of Furnishing.” These two types of notices are critical creations of the Bill, and appear to be modeled after the process that has been in place in Ohio for years.

These new notice requirements seek to address the longstanding problem in Pennsylvania of owners and contractors not knowing the identity of subcontractors or material suppliers furnishing labor or materials for a project. As a result, an owner or contractor often did not even have knowledge of the identity of a potential lien claimant, let alone the fact that they possessed a claim, until receiving a notice of intent to file a lien. The Bill provides the owner with the right to file a Notice of Commencement with the Directory before work on an improvement begins in order to identify all subcontractors and material suppliers that may have lien rights through their subsequent required filing of a Notice of Furnishing.

Mechanics’ Liens: Labor Unions’ Right to File a Lien as a Subcontractor

In Bricklayers of Western Pa. Comb. Funds, Inc. v. Scott’s Development Co., 41 A.3d 16 (Pa. Super. Ct. 2012), the Superior Court held that (1) the substantive provisions of the Lien Law (as opposed to its procedural provisions) must be liberally construed to effect the Lien Law’s remedial purpose and (2) labor unions fell within the definition of “subcontractor” under the Lien Law, and therefore had the right to file a mechanics’ lien claim. On November 28, 2012, the Pennsylvania Supreme Court granted Scott’s Development Company’s petition for allowance of appeal. Therefore, in 2013 the Supreme Court will address whether the Superior Court interpreted the Lien Law too liberally and whether a labor union has the right to file a mechanic’s lien claim under the Lien Law.