THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY KILLION, TURZAI, MILLER, MUSTIO, KRIEGER AND MARSHALL, MAY 25, 2011

AS AMENDED ON SECOND CONSIDERATION, HOUSE OF REPRESENTATIVES, MARCH 27, 2012   

AN ACT

Amending the act of August 24, 1963 (P.L.1175, No.497), entitled

"An act to codify, amend, revise and consolidate the laws

relating to mechanics' liens," further providing for

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definitions and for right to lien and amount, for formal

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notice by subcontractor as condition precedent,; providing

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for State Construction Notices Directory and for notice of

commencement and furnishing requirements; and further

providing for priority of lien and for discharge of lien on

payment into court or entry of security.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Section 301 of the act of August 24, 1963

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(P.L.1175, No.497), known as the Mechanics' Lien Law of

1963, is amended to read:

Section 1.  Section 201 of the act of August 24, 1963

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(P.L.1175, No.497), known as the Mechanics' Lien Law of 1963, is

amended by adding paragraphs to read:

Section 201.  Definitions.--The following words, terms and

phrases when used in this act shall have the meaning ascribed to

them in this section, except where the context clearly indicates

a different meaning:

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(15)  "Department" means the Department of Labor and

Industry.

(16)  "Directory" means the State Construction Notices

Directory in section 501.1.

Section 2.  Section 301 of the act is amended to read:

Section 301.  Right to Lien; Amount; Subcontractor.--[Every]

(a)  General Rule. Except as provided under subsection (b),

every improvement and the estate or title of the owner in the

property shall be subject to a lien, to be perfected as herein

provided, for the payment of all debts due by the owner to the

contractor or by the contractor to any of his subcontractors for

labor or materials furnished in the erection or construction, or

the alteration or repair of the improvement, provided that the

amount of the claim, other than amounts determined by

apportionment under section 306(b) of this act, shall exceed

five hundred dollars ($500).

(b)  Subcontractor. A subcontractor shall lose the right to a

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lien with respect to an improvement to a residential property

when the owner has paid the full contract price to the

contractor.

Section 2.  Sections 501 and 508 of the act, amended June 29,

2006 (P.L.210, No.52), are amended to read:

Section 501. [Formal] Notice [by Subcontractor as Condition

Precedent].--

(a)  Notice of Commencement.

(1)  Prior to commencing labor or work or furnishing

materials for an improvement on real property that may give rise

to a mechanics' lien under this act, the owner or agent of the

owner may file a notice of commencement with the prothonotary of

the court of common pleas in the judicial district in which the

project is located. The notice must include all of the

following:

(i)  Name, address and telephone number of the contractor.

(ii)  Name and location of the project being constructed.

(iii)  Legal description of the property upon which the

improvements are being made.

(iv)  Name and address of the true owner of the property.

(v)  Name and address of the person other than the owner at

whose instance the improvements are being made, if that person

is not the true owner of the property.

(vi)  Name and the address of a surety for the performance

and payment bonds.

(2)  The owner or contractor must conspicuously post a copy

of the notice at the project site at the time that physical work

commences upon the property and the owner shall ensure that the

copy of the notice remains posted for the duration of the

project.

(3)  The owner must deliver a copy of the notice of

commencement to the contractor within seven (7) days after the

notice is filed, or within seven (7) days after entering into a

contract with a subsequent contractor. If the notice is not

delivered to a contractor within the seven-day period,

subsection (b) shall not apply to a subcontractor associated

with the contractor.

(4)  The owner or contractor who has been provided with a

notice of commencement shall provide a copy of a notice of

commencement to a subcontractor within ten (10) days after the

subcontractor makes a written request for a copy of the notice.

The owner or contractor who fails to provide the notice under

this paragraph shall be liable for all costs incurred by a

subcontractor, including attorney fees, in obtaining the

information necessary to serve a notice of furnishing under

subsection (b).

(5)  A subcontractor, which has received a copy of a notice

of commencement from an owner or contractor, shall provide a

copy of the notice within ten (10) days to a subcontractor that

makes a written request. If a subcontractor fails to provide the

notice as required by this paragraph, he shall be liable for all

costs incurred by the requesting subcontractor, including

attorney fees, in obtaining the information necessary to serve a

notice of furnishing under subsection (b).

(b)  Notice of Furnishing. If a notice is filed under

subsection (a)(1) and posted under subsection (a)(2), a

subcontractor that performs work or services or provides

material or equipment in furtherance of an improvement to

property must, as a condition of retaining lien rights under

section 301, substantially comply with all of the following to

file a notice of furnishing:

(1)  Subject to paragraph (5)(ii), the subcontractor must

serve the notice upon the owner within twenty (20) days after

first performing work or services or first providing materials

or equipment in connection with the improvement of the property 

or within twenty (20) days after being provided with a notice of

commencement if the subcontractor first performed work or

services or provided materials or equipment before receiving a

copy of notice of commencement.

(2)  The notice must be served in one of the following

manners:

(i)  Certified mail to owner's address.

(ii)  Personal delivery to the owner. Evidence of delivery

must be an acknowledgment signed by the owner.

(3)  The notice must contain, at a minimum, the following:

(i)  A general description of the labor, skill, materials,

fixtures, machinery or tools furnished.

(ii)  Name and address of the person supplying items in

subparagraph (i).

(iii)  Name and address of the person that contracted for the

items in subparagraph (i).

(iv)  A description sufficient to identify the property which

is being improved.

(4)  Notice must be substantially in the following form:

Notice of Furnishing

(For use in connection with improvements to property other

than public improvements)

TO:                                 

(Name of owner)

(Address of owner)

Please take notice that the undersigned is performing

certain work or labor or furnishing certain materials

to                       (Name and address of other contracting

party) in connection with the improvement to the real property

located at                       . The labor, work or materials

were performed or furnished first, or will be furnished first on

(date).

WARNING TO OWNER: THIS NOTICE IS REQUIRED BY THE PENNSYLVANIA

MECHANICS' LIEN LAW. IF YOU HAVE ANY QUESTIONS ABOUT YOUR RIGHTS

OR DUTIES UNDER THESE STATUTES YOU SHOULD SEEK LEGAL ASSISTANCE

TO PROTECT YOU FROM THE POSSIBILITY OF PAYING TWICE FOR

IMPROVEMENTS TO YOUR PROPERTY.

(Name and Address of Lien Claimant

By

(Name and capacity of party signing for lien claimant)

(Address of Signing Party)

(Date)

(5)  Filing of a notice under this subsection preserves the

lien rights of a subcontractor in compliance with this act as

follows:

(i)  For amounts owing for work and services performed and

materials and equipment furnished from the date the work or

services were first performed or materials or equipment were

first furnished through the date of service of the notice of

furnishing and thereafter.

(ii)  A notice delivered outside the time frame under

paragraph (1) preserves the right to file a lien which is only

enforceable for the services or materials furnished within the

period of twenty (20) days before the date on which notice is

given.

(6)  If a subcontractor does not substantially comply with

this subsection, the subcontractor forfeits the right to file a

lien claim.

(b.1)  Time Period of Formal Notice. No claim by a

subcontractor, whether for erection or construction or for

alterations or repairs, shall be valid unless, at least thirty

(30) days before the same is filed, he shall have given to the

owner a formal written notice of his intention to file a claim,

except that such notice shall not be required where the claim is

filed pursuant to a rule to do so as provided by section 506.

(c)  Contents of Formal Notice. The formal notice shall

state:

(1)  the name of the party claimant;

(2)  the name of the person with whom he contracted;

(3)  the amount claimed to be due;

(4)  the general nature and character of the labor or

materials furnished;

(5)  the date of completion of the work for which his claim

is made;

(6)  a brief description sufficient to identify the property

claimed to be subject to the lien.

(d)  Service of Notice. The notice provided by this section

may be served by first class, registered or certified mail on

the owner or his agent or by an adult in the same manner as a

writ of summons in assumpsit, or if service cannot be so made

then by posting upon a conspicuous public part of the

improvement.

(b)  Subcontractor. A subcontractor does not have the right

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to a lien with respect to an improvement to a residential

property if:

(1)  the owner or tenant paid the full contract price to the

contractor; and

(2)  the property is or is intended to be used as the

residence of the owner or tenant.

Section 3.  The act is amended by adding sections to read:

Section 501.1.  State Construction Notices Directory.--

(a)  Establishment of Directory. The department shall

establish an Internet website to be known as the State

Construction Notices Directory.

(b)  Third-party Administration. The department may contract

with a third-party vendor to establish and administer the

Internet website.

(c)  Purpose of Directory. The directory shall:

(1)  Serve primarily as a means for contractors and

subcontractors to readily locate notices of commencement filed

under section 501.2(a).

(2)  Act as a central Statewide repository for notices filed

under section 501.2.

(d)  Operational Date. The department shall have the

directory operational on July 1, 2013. The department may,

however, establish a later effective date, if it provides

sufficient reasons for the delay in the implementation of the

program in a notice to the chairman and minority chairman of the

Labor and Industry Committee of the Senate and the chairman and

minority chairman of the Labor and Industry Committee of the

House of Representatives.

(e)  Public Awareness. When appropriate, the department shall

publish notice in the Pennsylvania Bulletin advising the public

of plans for and the existence of the directory. The department

shall take reasonable measures to inform the general public of

the directory and its purpose.

(f)  Directory Fees. The department may assess filing fees to

owners filing notices under section 501.2(a) to cover the costs

of administration. If a contracted third-party vendor is

administering the website, the assessed fees must be designated

in the contract. The department shall:

(1)  Consider the fee levels in awarding a contract.

(2)  Ensure the fee levels are as favorable as possible to

users.

(g)  Posting of Notices. The directory shall:

(1)  Make public notices filed under section 501.2 in a job

site specific format.

(2)  Provide copies of the filings of notice of furnishing

under section 501.2(b) to an owner who files a notice of

commencement under section 501.2(a).

(3)  Provide hard copy printing of electronic receipts for an

individual filing evidencing the date and time of the individual

filing and the content of the individual filing.

(4)  List the notices of furnishing filed with a notice of

commencement.

(h)  Index. The directory must be primarily indexed by county

and a notice of commencement filed with the directory shall be

searchable by owner name, contractor name, property address or

other identifying features that the department believes are

necessary.

Section 501.2.  Notice of Commencement and Furnishing

Requirements.--

(a)  Notice of Commencement.

(1)  Prior to commencing labor or work or furnishing

materials for an improvement on real property that may give rise

to a mechanics' lien under this act, the owner or agent of the

owner may file a notice of commencement with the State

Construction Notices Directory. The notice must include the

following:

(i)  Name, address and e-mail address of the contractor.

(ii)  Name and location of the project being constructed.

(iii)  Legal description of the property upon which the

improvements are being made.

(iv)  Name, address and e-mail address of the legal record

owner of the property.

(v)  Name, address and e-mail address of the person other

than the owner at whose direction the improvements are being

made, if that person is not the true legal record owner of the

property.

(vi)  If applicable, the name, address and e-mail address of

a surety for the performance and payment bonds.

(2)  The owner shall conspicuously post a copy of the notice

at the project site before physical work commences upon the

property, and the owner shall take reasonable measures to insure

that the copy of the notice of commencement remains posted at

the project site for the duration of the project. For the

purposes of this paragraph, the term "reasonable measures" means

the reposting of notice by the owner within 48 hours after being

notified in writing or e-mail that the notice is not posted.

(b)  Notice of Furnishing. A subcontractor that performs work

or services or provides material in furtherance of an

improvement to property shall, if a notice of commencement has

been properly and timely filed under subsection (a), as a

condition of retaining lien rights under section 301:

(1)  Have a positive duty to monitor the State Construction

Notices Directory to identify appropriate notices of

commencement.

(2)  Substantially comply with the following to file a notice

of furnishing:

(i)  Subject to subparagraph (v)(A), the subcontractor shall

file notice upon the owner within twenty (20) days after first

performing work or services or first providing materials in

connection with the improvement of the property.

(ii)  The notice must be served in one of the following

manners:

(A)  Certified mail to the owner's address.

(B)  Personal delivery to the owner. Evidence of delivery

must be an acknowledgment signed by the owner.

(C)  Filing of notice on State Construction Notices

Directory.

(iii)  The notice must contain, at a minimum, the following:

(A)  A general description of the labor, skill, materials,

fixtures, machinery or tools furnished.

(B)  Name and address of the person supplying items in clause

(A).

(C)  Name and address of the person that contracted for the

items in clause (A).

(D)  A description sufficient to identify the property which

is being improved.

(iv)  Notice must be substantially in the following form:

Notice of Furnishing

(For use in connection with improvements to property other

than public improvements)

TO:                                 

(Name of owner)

(Address of owner)

Please take notice that the undersigned is performing

certain work or labor or furnishing certain materials

to                       (Name and address of other contracting

party) in connection with the improvement to the real property

located at                       . The labor, work or materials

were performed or furnished first, or will be furnished first on         

(date).

(Name and Address of Lien Claimant

By

(Name and capacity of party signing for lien claimant)

(Address of Signing Party)

(Date)

(v)  Filing of a notice under this subsection preserves the

lien rights of a subcontractor in compliance with this act as

follows:

(A)  For amounts owing for work and services performed and

materials furnished from the date the work or services were

first performed or materials were first furnished through the

date of service of the notice of furnishing and thereafter.

(B)  A notice delivered outside the time frame under

subparagraph (i) preserves the right to file a lien which is

only enforceable for the services or materials furnished within

the period of twenty (20) days before the date on which notice

is given and thereafter.

(vi)  If a subcontractor does not substantially comply with

this subsection, the subcontractor forfeits the right to file a

lien claim.

(c)  Construction. Subsection (b) may not be interpreted to

affect the ability of a subcontractor or contractor to waive his

lien rights under sections 401 and 402.

(d)  Public policy.

(1)  It is against public policy and unlawful for a

contractor or subcontractor to request or require that a

subcontractor not file a notice of furnishing as required to

maintain his lien rights, in order that the subcontractor may

enter into or maintain a contract for work or furnishing of

materials on an improvement.

(2)  A subcontractor has the right to file a lien for the

work and services performed and the materials furnished under

this act, irrespective of compliance with section 501.2(b), if

he proves that the failure to comply with section 501.2(b) was

directly the result of a contractor or subcontractor violating

paragraph (1).

Section 4.  Section 508 of the act, amended June 29, 2006

(P.L.210, No.52), is amended to read:

Section 508.  Priority of Lien.--The lien of a claim filed

under this act shall take effect and have priority as follows:

(a)  Except as set forth in subsection (c), in the case of

the erection or construction of an improvement, as of the date

of the visible commencement upon the ground of the work of

erecting or constructing the improvement.

(b)  Except as set forth in subsection (c), in the case of

the alteration or repair of an improvement, as of the date of

the filing of the claim.

(c)  Any lien obtained under this act by a contractor or

subcontractor shall be subordinate to the following:

(1)  A purchase money mortgage as defined in 42 Pa.C.S. §

8141(1) (relating to time from which liens have priority).

(2)  An open-end mortgage as defined in 42 Pa.C.S. § 8143(f)

(relating to open-end mortgages), of the proceeds of which are

used to pay all or part of the cost of completing erection,

construction, alteration or repair of the mortgaged premises

secured by the open-end mortgage.

(3)  The refinance or modification of a purchase money

mortgage as defined in 42 Pa.C.S. § 8141(1) or open-end mortgage

as defined in 42 Pa.C.S. § 8143(f) notwithstanding that:

(i)  the new principal amount of the mortgage may exceed the

stated amount of the original mortgage; and

(ii)  advances made under the mortgage may be used for

purposes unrelated to the cost of completing erection,

construction, alteration or repair of the mortgaged premises.

Section 3 5.  Section 510 heading of the act is amended and

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the section is amended by adding a subsection to read:

Section 510.  Discharge of Lien [on Payment into Court or

Entry of Security].--

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(f)  Residential property. A claim filed under this act with

respect to an improvement to a residential property subject to

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section 301(b) shall, upon petition or motion to the court by

the owner or a party in interest, be discharged as a lien

against the property when:

(1)  the owner or tenant has paid the full contract price to

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the contractor; or

(2)  the lien shall be reduced to the amount of the unpaid

contract price owed by the owner or tenant to the contractor.

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Section 4 6.  This act shall apply as follows:

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(1)  The amendment of sections 301, 508 and 510 of the

act shall apply to contracts entered into on or after the

effective date of this section.

(2)  The amendment of section 501 of the act shall apply

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to contracts entered into or renewed on or after the

effective date of this paragraph.

Section 5.  This act shall take effect January 1, 2012.

(2)  The addition of section 501.2 of the act shall take

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effect July 1, 2013, or on the date designated by the

Department of Labor and Industry.

Section 7.  This act shall take effect in 60 days.