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| PRIOR PRINTER'S NO. 569 | PRINTER'S NO. 1198 |
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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY BROWNE, ROBBINS, BOSCOLA, ORIE, TOMLINSON, WAUGH, WOZNIAK, VANCE, EARLL, FOLMER AND WONDERLING, MARCH 2, 2009 |
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| SENATOR GORDNER, LABOR AND INDUSTRY, AS AMENDED, JUNE 23, 2009 |
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| AN ACT |
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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 lien by claimant, for right to |
5 | limit claims to unpaid balance of contract price and for |
6 | priority of lien. |
7 | Amending the act of August 24, 1963 (P.L.1175, No.497), entitled | <-- |
8 | "An act to codify, amend, revise and consolidate the laws |
9 | relating to mechanics' liens," further providing for |
10 | definitions and for waiver of lien by claimant. |
11 | The General Assembly of the Commonwealth of Pennsylvania |
12 | hereby enacts as follows: |
13 | Section 1. Sections 201(14), 401, 405 and 508 of the act of | <-- |
14 | August 24, 1963 (P.L.1175, No.497), known as the Mechanics' Lien |
15 | Law of 1963, amended June 29, 2006 (P.L.210, No.52), are amended |
16 | to read: |
17 | Section 201. Definitions.--The following words, terms and |
18 | phrases when used in this act shall have the meaning ascribed to |
19 | them in this section, except where the context clearly indicates |
20 | a different meaning: |
21 | * * * |
22 | (14) "Residential [building] property" means property on |
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1 | which there is or will be constructed a residential building not |
2 | more than three stories in height, not including any basement |
3 | level, regardless of whether any portion of that basement is at |
4 | grade level, or which is zoned or otherwise approved for |
5 | residential development on which there is or will be constructed |
6 | a residential building not more than three stories in height, |
7 | not including any basement level, regardless of whether any |
8 | portion of that basement is at grade level, planned residential |
9 | development or agricultural use, or for which a residential |
10 | subdivision or land development plan or planned residential |
11 | development plan has received preliminary, tentative or final |
12 | approval on which there is or will be constructed a residential |
13 | building not more than three stories in height, not including |
14 | any basement level, regardless of whether any portion of that |
15 | basement is at grade level, pursuant to the act of July 31, 1968 |
16 | (P.L.805, No.247), known as the "Pennsylvania Municipalities |
17 | Planning Code." |
18 | Section 401. Waiver of Lien by Claimant.-- |
19 | (a) Residential [Buildings] Property. |
20 | [(1)] A contractor or subcontractor may waive his right to |
21 | file a claim against residential property [for the erection, |
22 | construction, alteration or repair of a residential building, in |
23 | which the total contract price between the owner and the |
24 | contractor is less than one million dollars ($1,000,000),] by a |
25 | written instrument signed by him or by any conduct which |
26 | operates equitably to estop such contractor from filing a claim. |
27 | [(2) (i) A subcontractor may waive his right to file a |
28 | claim against property for the erection, construction, |
29 | alteration or repair of a residential building, in which the |
30 | total contract price between the owner and the contractor is |
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1 | less than one million dollars ($1,000,000), by a written |
2 | instrument signed by him or by any conduct which operates |
3 | equitably to estop him from filing a claim. |
4 | (ii) A subcontractor may waive his right to file a claim |
5 | against the property, irrespective of the contract price between |
6 | the owner and the contractor, of a residential building by a |
7 | written instrument signed by him or by any conduct which |
8 | operates equitably to estop him from filing a claim, provided |
9 | the contractor has posted a bond guaranteeing payment for labor |
10 | and materials provided by subcontractors.] |
11 | (b) Nonresidential Buildings. |
12 | (1) Except as provided in subsection [(a)(1)] (a), a waiver |
13 | by a contractor of lien rights is against public policy, |
14 | unlawful and void unless given in consideration for payment for |
15 | the work, services, materials or equipment provided and only to |
16 | the extent that such payment is actually received. |
17 | (2) Except as provided in subsection [(a)(2)] (a), a waiver |
18 | by a subcontractor of lien rights is against public policy, |
19 | unlawful and void, unless given in consideration for payment for |
20 | the work, services, materials or equipment provided and only to |
21 | the extent that such payment is actually received, or unless the |
22 | contractor has posted a bond guaranteeing payment for labor and |
23 | materials provided by subcontractors. |
24 | Section 405. [Right of Owner to Limit Claims to Unpaid |
25 | Balance of Contract Price.--Where the claims of subcontractors |
26 | exceed in the aggregate the unpaid balance of the contract price |
27 | specified in the contract between the owner and the contractor, |
28 | then if the subcontractor has actual notice of the total amount |
29 | of said contract price and of its provisions for the time or |
30 | times for payment thereof before any labor or materials were |
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1 | furnished by him, or if such contract or the pertinent |
2 | provisions thereof were filed in the office of the prothonotary |
3 | in the time and manner provided in section 402, each claim |
4 | shall, upon application of the owner, be limited to its pro-rata |
5 | share of the contract price remaining unpaid, or which should |
6 | have remained unpaid, whichever is greatest in amount at the |
7 | time notice of intention to file a claim was first given to the |
8 | owner, such notice inuring to the benefit of all claimants.] |
9 | Right to Limit Claims to Unpaid Balance of Contract Price.-- |
10 | (a) Contractor. The maximum amount for which an interest in |
11 | real property may be subject to a lien under this act for one or |
12 | more lien claims filed pursuant to this act shall not be greater |
13 | than the price of the contract between the owner and the |
14 | contractor less the amount of payments made by the owner to the |
15 | contractor or to another lien claimant prior to receipt by the |
16 | owner of a notice of intention to file a lien claim pursuant to |
17 | section 501. |
18 | (b) Subcontractors. |
19 | (1) In the case of a lien claim filed by a subcontractor in |
20 | privity of contract with the contractor, the maximum amount for |
21 | which an interest in real property may be subject to a lien |
22 | under this act for one or more lien claims filed under this act |
23 | shall not be greater than the lesser of: |
24 | (i) the amount provided in subsection (a); or |
25 | (ii) the price of the contract between the contractor and |
26 | subcontractor less the amount of payments, if any, justifiably |
27 | made prior to receipt by the contractor of a copy of a notice of |
28 | intention to file a claim by the contractor to the subcontractor |
29 | or to another lien claimant in privity of contract with the |
30 | subcontractor. |
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1 | (2) In the case of a lien claim filed by a party of privity |
2 | in contract with a subcontractor, the maximum amount for which |
3 | an interest in real property may be subject to a lien under this |
4 | act for one or more lien claims filed under this act shall not |
5 | be greater than the lesser of: |
6 | (i) the amount provided in subsection (a); or |
7 | (ii) the price of the contract between the contractor and |
8 | subcontractor with whom the party has contracted, less the |
9 | amount of payments justifiably made, if any, prior to receipt by |
10 | the contractor of a copy of the notice of intention to file a |
11 | claim to the subcontractor or to another lien claimant; or |
12 | (iii) the price of the contract between the subcontractor |
13 | and the party less the amount of payments justifiably made, if |
14 | any, by the subcontractor to the party. |
15 | (c) Breach. For purposes of determining the maximum amount |
16 | for which an interest in real property may be subject to a lien |
17 | in the event that a contractor or subcontractor is in breach |
18 | under the terms of a contract to which it is a party, the price |
19 | of the contract shall be deemed to have been reduced by the |
20 | damages incurred by the nonbreaching party to the contract as a |
21 | result of the breach. |
22 | (d) For purposes of this section. |
23 | (1) The term "price of the contract" shall include amounts |
24 | due for labor or material which are furnished as a result of: |
25 | (i) a contract; |
26 | (ii) a written amendment to a contract; or |
27 | (iii) any change order or other directive for labor or |
28 | materials in addition to the scope of work under an initial |
29 | contract, provided that the lien claimant has notified the party |
30 | with whom it is in privity of contract within seven (7) days of |
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1 | the receipt of the change order or other directive that the |
2 | furnishing is alleged to be in addition to the scope of work |
3 | under the contract; or |
4 | (2) in the case of a supplier, "price of the contract" |
5 | includes a delivery or order slip signed by the owner, |
6 | contractor or subcontractor, or an authorized agent of any of |
7 | them. |
8 | (3) "Price of the contract" does not include an agreement |
9 | predominantly intended to reduce the credit risk of a party, |
10 | including a joint check arrangement, payment guarantee or |
11 | similar credit agreement. |
12 | Section 508. Priority of Lien.--The lien of a claim filed |
13 | under this act shall take effect and have priority as follows: |
14 | (a) Except as set forth in subsection (c), in the case of |
15 | the erection or construction of an improvement, as of the date |
16 | of the visible commencement upon the ground of the work of |
17 | erecting or constructing the improvement. |
18 | (b) Except as set forth in subsection (c), in the case of |
19 | the alteration or repair of an improvement, as of the date of |
20 | the filing of the claim. |
21 | (c) Any lien obtained under this act by a contractor or |
22 | subcontractor shall be subordinate to the following: |
23 | (1) A purchase money mortgage as defined in 42 Pa.C.S. § |
24 | 8141(1) (relating to time from which liens have priority). |
25 | (2) An open-end mortgage as defined in 42 Pa.C.S. § 8143(f) |
26 | (relating to open-end mortgages), the proceeds of which are used |
27 | to pay all or part of the cost of completing erection, |
28 | construction, alteration or repair of the mortgaged premises |
29 | secured by the open-end mortgage[.] or to secure certain |
30 | advances under 42 Pa.C.S. § 8144 (relating to mortgages to |
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1 | secure certain advances). |
2 | (3) Any substitution, refinance or modification of a |
3 | mortgage referred to under paragraphs (1) and (2). |
4 | Section 1. Sections 201(14) and 401 of the act of August 24, | <-- |
5 | 1963 (P.L.1175, No.497), known as the Mechanics' Lien Law of |
6 | 1963, amended June 29, 2006 (P.L.210, No.52), are amended to |
7 | read: |
8 | Section 201. Definitions.--The following words, terms and |
9 | phrases when used in this act shall have the meaning ascribed to |
10 | them in this section, except where the context clearly indicates |
11 | a different meaning: |
12 | * * * |
13 | (14) "Residential [building] property" means property on |
14 | which there is or will be constructed a residential building not |
15 | more than three stories in height, not including any basement |
16 | level, regardless of whether any portion of that basement is at |
17 | grade level, or which is zoned or otherwise approved for |
18 | residential development on which there is or will be constructed |
19 | a residential building not more than three stories in height, |
20 | not including any basement level, regardless of whether any |
21 | portion of that basement is at grade level, planned residential |
22 | development or agricultural use, or for which a residential |
23 | subdivision or land development plan or planned residential |
24 | development plan has received preliminary, tentative or final |
25 | approval on which there is or will be constructed a residential |
26 | building not more than three stories in height, not including |
27 | any basement level, regardless of whether any portion of that |
28 | basement is at grade level, pursuant to the act of July 31, 1968 |
29 | (P.L.805, No.247), known as the "Pennsylvania Municipalities |
30 | Planning Code." |
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1 | Section 401. Waiver of Lien by Claimant.-- |
2 | (a) Residential [Buildings] Property. |
3 | [(1)] A contractor or subcontractor may waive his right to |
4 | file a claim against residential property [for the erection, |
5 | construction, alteration or repair of a residential building, in |
6 | which the total contract price between the owner and the |
7 | contractor is less than one million dollars ($1,000,000),] by a |
8 | written instrument signed by him or by any conduct which |
9 | operates equitably to estop such contractor from filing a claim. |
10 | [(2) (i) A subcontractor may waive his right to file a |
11 | claim against property for the erection, construction, |
12 | alteration or repair of a residential building, in which the |
13 | total contract price between the owner and the contractor is |
14 | less than one million dollars ($1,000,000), by a written |
15 | instrument signed by him or by any conduct which operates |
16 | equitably to estop him from filing a claim. |
17 | (ii) A subcontractor may waive his right to file a claim |
18 | against the property, irrespective of the contract price between |
19 | the owner and the contractor, of a residential building by a |
20 | written instrument signed by him or by any conduct which |
21 | operates equitably to estop him from filing a claim, provided |
22 | the contractor has posted a bond guaranteeing payment for labor |
23 | and materials provided by subcontractors.] |
24 | (b) Nonresidential Buildings. |
25 | (1) Except as provided in subsection [(a)(1)] (a), a waiver |
26 | by a contractor of lien rights is against public policy, |
27 | unlawful and void unless given in consideration for payment for |
28 | the work, services, materials or equipment provided and only to |
29 | the extent that such payment is actually received. |
30 | (2) Except as provided in subsection [(a)(2)] (a), a waiver |
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1 | by a subcontractor of lien rights is against public policy, |
2 | unlawful and void, unless given in consideration for payment for |
3 | the work, services, materials or equipment provided and only to |
4 | the extent that such payment is actually received, or unless the |
5 | contractor has posted a bond guaranteeing payment for labor and |
6 | materials provided by subcontractors. |
7 | Section 2. This act shall take effect in 60 days. |
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