PRIOR PRINTER'S NO. 2022 PRINTER'S NO. 3530
No. 1637 Session of 2005
INTRODUCED BY KENNEY, J. TAYLOR, BELFANTI, CALTAGIRONE,
CRAHALLA, CREIGHTON, DENLINGER, JAMES, KOTIK, PYLE, STABACK,
THOMAS, WALKO, YOUNGBLOOD, MUSTIO, M. KELLER, BEYER,
FAIRCHILD AND LEH, JUNE 6, 2005
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
FEBRUARY 8, 2006
AN ACT
1 Amending the act of August 24, 1963 (P.L.1175, No.497), entitled
2 "An act to codify, amend, revise and consolidate the laws
3 relating to mechanics' liens," further providing FOR <--
4 DEFINITIONS, for waiver of liens, for effect of waiver of
5 liens and, for rescission of contracts between contractors <--
6 and subcontractors AND FOR PRIORITY OF LIENS. <--
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Section 401 of the act of August 24, 1963 <--
10 (P.L.1175, No.497), known as the Mechanics' Lien Law of 1963, is
11 amended to read:
12 SECTION 1. SECTIONS 201 AND 401 OF THE ACT OF AUGUST 24, <--
13 1963 (P.L.1175, NO.497), KNOWN AS THE MECHANICS' LIEN LAW OF
14 1963, ARE AMENDED TO READ:
15 SECTION 201. DEFINITIONS.--THE FOLLOWING WORDS, TERMS AND
16 PHRASES WHEN USED IN THIS ACT SHALL HAVE THE MEANING ASCRIBED TO
17 THEM IN THIS SECTION, EXCEPT WHERE THE CONTEXT CLEARLY INDICATES
18 A DIFFERENT MEANING:
1 (1) "IMPROVEMENT" INCLUDES ANY BUILDING, STRUCTURE OR OTHER
2 IMPROVEMENT OF WHATSOEVER KIND OR CHARACTER ERECTED OR
3 CONSTRUCTED ON LAND, TOGETHER WITH THE FIXTURES AND OTHER
4 PERSONAL PROPERTY USED IN FITTING UP AND EQUIPPING THE SAME FOR
5 THE PURPOSE FOR WHICH IT IS INTENDED.
6 (2) "PROPERTY" MEANS THE IMPROVEMENT, THE LAND COVERED
7 THEREBY AND THE LOT OR CURTILAGE APPURTENANT THERETO BELONGING
8 TO THE SAME LEGAL OR EQUITABLE OWNER REASONABLY NEEDED FOR THE
9 GENERAL PURPOSES THEREOF AND FORMING A PART OF A SINGLE BUSINESS
10 OR RESIDENTIAL PLANT.
11 (3) "OWNER" MEANS AN OWNER IN FEE, A TENANT FOR LIFE OR
12 YEARS OR ONE HAVING ANY OTHER ESTATE IN OR TITLE TO PROPERTY.
13 (4) "CONTRACTOR" MEANS ONE WHO, BY CONTRACT WITH THE OWNER,
14 EXPRESS OR IMPLIED, ERECTS, CONSTRUCTS, ALTERS OR REPAIRS AN
15 IMPROVEMENT OR ANY PART THEREOF OR FURNISHES LABOR, SKILL OR
16 SUPERINTENDENCE THERETO; OR SUPPLIES OR HAULS MATERIALS,
17 FIXTURES, MACHINERY OR EQUIPMENT REASONABLY NECESSARY FOR AND
18 ACTUALLY USED THEREIN; OR ANY OR ALL OF THE FOREGOING, WHETHER
19 AS SUPERINTENDENT, BUILDER OR MATERIALMAN. THE TERM ALSO
20 INCLUDES AN ARCHITECT OR ENGINEER WHO, BY CONTRACT WITH THE
21 OWNER, EXPRESS OR IMPLIED, IN ADDITION TO THE PREPARATION OF
22 DRAWINGS, SPECIFICATIONS AND CONTRACT DOCUMENTS ALSO
23 SUPERINTENDS OR SUPERVISES ANY SUCH ERECTION, CONSTRUCTION,
24 ALTERATION OR REPAIR.
25 (5) "SUBCONTRACTOR" MEANS ONE WHO, BY CONTRACT WITH THE
26 CONTRACTOR, EXPRESS OR IMPLIED, ERECTS, CONSTRUCTS, ALTERS OR
27 REPAIRS AN IMPROVEMENT OR ANY PART THEREOF; OR FURNISHES LABOR,
28 SKILL OR SUPERINTENDENCE THERETO; OR SUPPLIES OR HAULS
29 MATERIALS, FIXTURES, MACHINERY OR EQUIPMENT REASONABLY NECESSARY
30 FOR AND ACTUALLY USED THEREIN; OR ANY OR ALL OF THE FOREGOING,
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1 WHETHER AS SUPERINTENDENT, BUILDER OR MATERIALMAN. THE TERM DOES
2 NOT INCLUDE AN ARCHITECT OR ENGINEER WHO CONTRACTS WITH A
3 CONTRACTOR OR SUBCONTRACTOR, OR A PERSON WHO CONTRACTS WITH A
4 SUBCONTRACTOR OR WITH A MATERIALMAN.
5 (6) "CLAIMANT" MEANS A CONTRACTOR OR SUBCONTRACTOR WHO HAS
6 FILED OR MAY FILE A CLAIM UNDER THIS ACT FOR A LIEN AGAINST
7 PROPERTY.
8 (7) "MATERIALS" MEANS BUILDING MATERIALS AND SUPPLIES OF ALL
9 KINDS, AND ALSO INCLUDES FIXTURES, MACHINERY AND EQUIPMENT
10 REASONABLY NECESSARY TO AND INCORPORATED INTO THE IMPROVEMENT.
11 (8) "COMPLETION OF THE WORK" MEANS PERFORMANCE OF THE LAST
12 OF THE LABOR OR DELIVERY OF THE LAST OF THE MATERIALS REQUIRED
13 BY THE TERMS OF THE CLAIMANT'S CONTRACT OR AGREEMENT, WHICHEVER
14 LAST OCCURS.
15 (9) "LABOR" INCLUDES THE FURNISHING OF SKILL OR
16 SUPERINTENDENCE.
17 (10) "ERECTION AND CONSTRUCTION" MEANS THE ERECTION AND
18 CONSTRUCTION OF A NEW IMPROVEMENT OR OF A SUBSTANTIAL ADDITION
19 TO AN EXISTING IMPROVEMENT OR ANY ADAPTATION OF AN EXISTING
20 IMPROVEMENT RENDERING THE SAME FIT FOR A NEW OR DISTINCT USE AND
21 EFFECTING A MATERIAL CHANGE IN THE INTERIOR OR EXTERIOR THEREOF.
22 (11) "ALTERATION AND REPAIR" MEANS ANY ALTERATION OR REPAIR
23 OF AN EXISTING IMPROVEMENT WHICH DOES NOT CONSTITUTE ERECTION OR
24 CONSTRUCTION AS DEFINED HEREIN.
25 (12) "ERECTION, CONSTRUCTION, ALTERATION OR REPAIR"
26 INCLUDES:
27 (A) DEMOLITION, REMOVAL OF IMPROVEMENTS, EXCAVATION,
28 GRADING, FILLING, PAVING AND LANDSCAPING, WHEN SUCH WORK IS
29 INCIDENTAL TO THE ERECTION, CONSTRUCTION, ALTERATION OR REPAIR;
30 (B) INITIAL FITTING UP AND EQUIPPING OF THE IMPROVEMENT WITH
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1 FIXTURES, MACHINERY AND EQUIPMENT SUITABLE TO THE PURPOSES FOR
2 WHICH THE ERECTION, CONSTRUCTION, ALTERATION OR REPAIR WAS
3 INTENDED; AND
4 (C) FURNISHING, EXCAVATING FOR, LAYING, RELAYING, STRINGING
5 AND RESTRINGING RAILS, TIES, PIPES, POLES AND WIRES, WHETHER ON
6 THE PROPERTY IMPROVED OR UPON OTHER PROPERTY, IN ORDER TO SUPPLY
7 SERVICES TO THE IMPROVEMENT.
8 (13) "PROTHONOTARY" MEANS THE PROTHONOTARY OF THE COURT OR
9 COURTS OF COMMON PLEAS OF THE COUNTY OR COUNTIES IN WHICH THE
10 IMPROVEMENT IS SITUATE.
11 (14) "RESIDENTIAL BUILDING" MEANS ANY OF THE FOLLOWING,
12 INCLUDING ACCESSORY STRUCTURES:
13 (A) A DETACHED ONE-FAMILY DWELLING;
14 (B) A DETACHED TWO-FAMILY DWELLING; OR
15 (C) A MULTIPLE SINGLE-FAMILY DWELLING WHICH IS NOT MORE THAN
16 THREE STORIES IN HEIGHT AND WHICH HAS A SEPARATE MEANS OF
17 EGRESS.
18 Section 401. Waiver of Lien by Claimant.--A contractor [or <--
19 subcontractor] may waive his right to file a claim by a written
20 SECTION 401. WAIVER OF LIEN BY CLAIMANT.--A CONTRACTOR OR <--
21 SUBCONTRACTOR MAY WAIVE HIS RIGHT TO FILE A CLAIM AGAINST
22 PROPERTY ON WHICH THERE IS A RESIDENTIAL BUILDING BY A WRITTEN
23 instrument signed by him or by any conduct which operates
24 equitably to estop such contractor [or subcontractor] from <--
25 filing a claim.
26 Section 2. Section 402 of the act, amended October 8, 2004
27 (P.L.806, No.96), is amended to read:
28 Section 402. Waiver by Contractor; Effect on
29 Subcontractor.--
30 (a) General Rule. A written contract between the owner and <--
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1 contractor, or a separate written instrument signed by the
2 contractor, which provides that no claim shall be filed by
3 [anyone] the contractor, shall be binding[; but the only
4 (A) GENERAL RULE. A WRITTEN CONTRACT BETWEEN THE OWNER OF <--
5 PROPERTY ON WHICH THERE IS A RESIDENTIAL BUILDING AND A
6 CONTRACTOR, OR A SEPARATE WRITTEN INSTRUMENT SIGNED BY THE
7 CONTRACTOR, WHICH PROVIDES THAT NO CLAIM SHALL BE FILED BY
8 ANYONE, SHALL BE BINDING: BUT THE ONLY admissible evidence
9 thereof, as against a subcontractor, shall be proof of actual
10 notice thereof to him before any labor or materials were
11 furnished by him; or proof that such contract or separate
12 written instrument was filed in the office of the prothonotary
13 prior to the commencement of the work upon the ground or within
14 ten (10) days after the execution of the principal contract or
15 not less than ten (10) days prior to the contract with the
16 claimant subcontractor, indexed in the name of the contractor as
17 defendant and the owner as plaintiff and also in the name of the
18 contractor as plaintiff and the owner as defendant. The only
19 admissible evidence that such a provision has, notwithstanding
20 its filing, been waived in favor of any subcontractor, shall be
21 a written agreement to that effect signed by all those who,
22 under the contract, have an adverse interest to the
23 subcontractor's allegation]. <--
24 (b) Electronic Indexing. Notwithstanding the indexing
25 requirements of subsection (a) in offices of the prothonotary in
26 which such a written contract between the owner and contractor
27 or separate written instrument is indexed electronically by
28 means of a computer system or similar system such that the names
29 of the contractor and owner are electronically retrievable
30 regardless of whether the parties are designated as plaintiff or
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1 defendant, the contract or separate written instrument filed
2 with the office of the prothonotary under subsection (a) may be
3 indexed in the name of the contractor as defendant and the owner
4 as plaintiff or in the name of the contractor as plaintiff and
5 the owner as defendant.
6 Section 3. Section 405 of the act is amended to read: <--
7 SECTION 3. SECTIONS 405 AND 508 OF THE ACT ARE AMENDED TO <--
8 READ:
9 Section 405. Right of Owner to Limit Claims to Unpaid
10 Balance of Contract Price.--Where [there has been no waiver of
11 liens and] the claims of subcontractors exceed in the aggregate
12 the unpaid balance of the contract price specified in the
13 contract between the owner and the contractor, then if the
14 subcontractor has actual notice of the total amount of said
15 contract price and of its provisions for the time or times for
16 payment thereof before any labor or materials were furnished by
17 him, or if such contract or the pertinent provisions thereof
18 were filed in the office of the prothonotary in the time and
19 manner provided in section 402, each claim shall, upon
20 application of the owner, be limited to its pro-rata share of
21 the contract price remaining unpaid, or which should have
22 remained unpaid, whichever is greatest in amount at the time
23 notice of intention to file a claim was first given to the
24 owner, such notice inuring to the benefit of all claimants.
25 SECTION 508. PRIORITY OF LIEN.--THE LIEN OF A CLAIM FILED <--
26 UNDER THIS ACT SHALL TAKE EFFECT AND HAVE PRIORITY AS FOLLOWS:
27 (A) [IN] EXCEPT AS SET FORTH IN SUBSECTION (C), IN THE CASE
28 OF THE ERECTION OR CONSTRUCTION OF AN IMPROVEMENT, AS OF THE
29 DATE OF THE VISIBLE COMMENCEMENT UPON THE GROUND OF THE WORK OF
30 ERECTING OR CONSTRUCTING THE IMPROVEMENT[; AND].
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1 (B) [IN] EXCEPT AS SET FORTH IN SUBSECTION (C), IN THE CASE
2 OF THE ALTERATION OR REPAIR OF AN IMPROVEMENT, AS OF THE DATE OF
3 THE FILING OF THE CLAIM.
4 (C) IN THE CASE OF A CLAIM FILED BY A SUBCONTRACTOR UNDER
5 SECTION 501, THE LIEN OBTAINED UNDER SUBSECTION (A) OR (B) SHALL
6 BE SUBORDINATE TO ANY OF THE FOLLOWING:
7 (1) A PURCHASE MONEY MORTGAGE, AS DEFINED IN 42 PA.C.S. §
8 8141(1) (RELATING TO TIME FROM WHICH LIENS HAVE PRIORITY).
9 (2) AN OPEN-END MORTGAGE, AS DEFINED IN 42 PA.C.S. § 8143(F)
10 (RELATING TO OPEN-END MORTGAGES), THE PROCEEDS OF WHICH ARE USED
11 TO PAY ALL OR PART OF THE COST OF COMPLETING ERECTION,
12 CONSTRUCTION, ALTERATION OR REPAIR OF THE MORTGAGED PREMISES
13 SECURED BY THE OPEN-END MORTGAGE.
14 Section 4. The amendment of sections OR ADDITION OF SECTIONS <--
15 201(14), 401 and 402 of the act shall apply to contracts entered
16 into on or after the effective date of this section.
17 Section 5. This act shall take effect in 60 days. <--
18 SECTION 5. THIS ACT SHALL TAKE EFFECT JANUARY 1, 2007. <--
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