PRIOR PRINTER'S NO. 1983

PRINTER'S NO.  2729

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

1602

Session of

2011

  

  

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

  

  

AS REPORTED FROM COMMITTEE ON LABOR AND INDUSTRY, HOUSE OF REPRESENTATIVES, AS AMENDED, NOVEMBER 14, 2011   

  

  

  

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 right to

<--

4

lien and amount, for formal notice by subcontractor as

5

condition precedent and for filing and notice of filing of

<--

6

claim, for priority of lien and for discharge of lien on

<--

7

payment into court or entry of security.

8

The General Assembly of the Commonwealth of Pennsylvania

9

hereby enacts as follows:

10

Section 1.  Sections 501 and 502 of the act of August 24,

<--

11

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

12

1963, amended June 29, 2006 (P.L.210, No.52), are amended to

13

read:

14

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

<--

15

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

16

1963, is amended to read:

17

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

18

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

19

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

20

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

 


1

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

2

contractor or by the contractor to any of his subcontractors for

3

labor or materials furnished in the erection or construction, or

4

the alteration or repair of the improvement, provided that the

5

amount of the claim, other than amounts determined by

6

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

7

five hundred dollars ($500).

8

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

9

lien with respect to an improvement to a residential property

10

when the owner has paid the full contract price to the

11

contractor.

12

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

13

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

14

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

15

Precedent].--

16

(a)  Notice of Commencement.

17

(1)  Not later than fifteen (15) days after the contractor

<--

18

physically commences work on the property, the owner, agent of

19

the owner or the contractor Prior to commencing labor or work or

<--

20

furnishing materials for an improvement on real property that

21

may give rise to a mechanics' lien under this act, the owner or

22

agent of the owner may file a notice of commencement with the

23

prothonotary of the court of common pleas in the judicial

24

district in which the project is located. The notice must

25

include all of the following:

26

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

27

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

28

(iii)  Legal description of the property upon which the

29

improvements are being made.

30

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

- 2 -

 


1

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

2

whose instance the improvements are being made, if that person

3

is not the true owner of the property.

4

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

5

and payment bonds.

6

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

7

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

8

commences upon the property and the owner shall ensure that the

<--

9

copy of the notice remains posted for the duration of the

10

project.

11

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

12

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

13

notice is filed.

<--

14

(4)  The contractor must give a copy of the notice to a

15

subcontractor that makes a written request. If a contractor

16

fails to comply with this paragraph within ten (10) days of

17

receipt of the written request, this section shall not apply to

18

the subcontractor that made the request., or within seven (7)

<--

19

days after entering into a contract with a subsequent

20

contractor. If the notice is not delivered to a contractor

21

within the seven-day period, subsection (b) shall not apply to a

22

subcontractor associated with the contractor.

23

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

24

notice of commencement shall provide a copy of a notice of

25

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

26

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

27

The owner or contractor who fails to provide the notice under

28

this paragraph shall be liable for all costs incurred by a

29

subcontractor, including attorney fees, in obtaining the

30

information necessary to serve a notice of furnishing under

- 3 -

 


1

subsection (b).

2

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

3

of commencement from an owner or contractor, shall provide a

4

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

5

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

6

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

7

costs incurred by the requesting subcontractor, including

8

attorney fees, in obtaining the information necessary to serve a

9

notice of furnishing under subsection (b).

10

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

11

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

12

subcontractor that is not in direct privity with the owner and 

<--

13

that performs work or services or provides material or equipment

14

in furtherance of an improvement to property must, as a

15

condition of retaining lien rights under section 301,

16

substantially comply with all of the following to file a notice

17

of furnishing:

18

(1)  Subject to paragraph (4)(ii) (5)(ii), the subcontractor

<--

19

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

20

after first performing work or services or first providing

21

materials or equipment in connection with the improvement of the

22

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

<--

23

notice of commencement if the subcontractor first performed work

24

or services or provided materials or equipment before receiving

25

a copy of notice of commencement.

26

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

27

manners:

28

(i)  Certified mail to owner's address.

29

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

30

must be an acknowledgment signed by the owner.

- 4 -

 


1

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

2

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

3

fixtures, machinery or tools furnished and the estimated price.

<--

4

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

5

subparagraph (i).

6

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

7

items in subparagraph (i).

8

(iv)  A description sufficient to identify the property which

9

is being improved.

10

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

<--

11

Notice of Furnishing

12

(For use in connection with improvements to property other

13

than public improvements)

14

TO:                                 

15

(Name of owner)

16

                                    

17

(Address of owner)

18

Please take notice that the undersigned is performing

19

certain work or labor or furnishing certain materials

20

to                       (Name and address of other contracting

21

party) in connection with the improvement to the real property

22

located at                       . The labor, work or materials

23

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

24

(date).

25

WARNING TO OWNER: THIS NOTICE IS REQUIRED BY THE PENNSYLVANIA

26

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

27

OR DUTIES UNDER THESE STATUTES YOU SHOULD SEEK LEGAL ASSISTANCE

28

TO PROTECT YOU FROM THE POSSIBILITY OF PAYING TWICE FOR

29

IMPROVEMENTS TO YOUR PROPERTY.

30

                            

- 5 -

 


1

(Name and Address of Lien Claimant

2

By

3

(Name and capacity of party signing for lien claimant)

4

                            

5

(Address of Signing Party)

6

                            

7

(Date)

8

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

<--

9

the lien rights of a subcontractor in compliance with this act

10

as follows:

11

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

12

materials and equipment furnished from the date the work or

13

services were first performed or materials or equipment were

14

first furnished through the date of service of the notice of

15

furnishing and thereafter.

16

(ii)  A notice delivered outside the time frame under

17

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

18

enforceable for the services or materials furnished within the

19

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

20

given.

21

(5) (6)  If a subcontractor does not substantially comply

<--

22

with this subsection, the subcontractor forfeits the right to

23

file a lien claim.

24

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

25

subcontractor, whether for erection or construction or for

26

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

27

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

28

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

29

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

30

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

- 6 -

 


1

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

2

state:

3

(1)  the name of the party claimant;

4

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

5

(3)  the amount claimed to be due;

6

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

7

materials furnished;

8

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

9

is made;

10

(6)  a brief description sufficient to identify the property

11

claimed to be subject to the lien.

12

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

13

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

14

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

15

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

16

then by posting upon a conspicuous public part of the

17

improvement.

18

Section 502.  Filing and Notice of Filing of Claim.--

<--

19

(a)  Perfection of Lien. To perfect a lien, every claimant

20

must:

21

(1)  file a claim with the prothonotary as provided by this

22

act within [six (6)] four (4) months after the completion of his

23

work; and

24

(2)  serve written notice of such filing upon the owner

25

within one (1) month after filing, giving the court, term and

26

number and date of filing of the claim. An affidavit of service

27

of notice, or the acceptance of service, shall be filed within

28

twenty (20) days after service setting forth the date and manner

29

of service. Failure to serve such notice or to file the

30

affidavit or acceptance of service within the times specified

- 7 -

 


1

shall be sufficient ground for striking off the claim.

2

(b)  Venue; Property in More Than One County. Where the

3

improvement is located in more than one county, the claim may be

4

filed in any one or more of said counties, but shall be

5

effective only as to the part of the property in the county in

6

which it has been filed.

7

(c)  Manner of Service. Service of the notice of filing of

8

claim shall be made by an adult in the same manner as a writ of

9

summons in assumpsit, or if service cannot be so made then by

10

posting upon a conspicuous public part of the improvement.

11

Section 2.  This act shall apply as follows:

12

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

13

to contracts entered into or renewed on or after the

14

effective date of this paragraph.

15

(2)  The amendment of section 502(a)(1) of the act shall

16

apply to claims for work completed on or after the effective

17

date of this paragraph.

18

Section 3.  This act shall take effect January 1, 2012.

19

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

<--

20

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

21

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

22

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

23

of the visible commencement upon the ground of the work of

24

erecting or constructing the improvement.

25

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

26

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

27

the filing of the claim.

28

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

29

subcontractor shall be subordinate to the following:

30

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

- 8 -

 


1

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

2

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

3

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

4

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

5

construction, alteration or repair of the mortgaged premises

6

secured by the open-end mortgage.

7

(3)  The refinance or modification of a purchase money

8

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

9

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

10

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

11

stated amount of the original mortgage; and

12

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

13

purposes unrelated to the cost of completing erection,

14

construction, alteration or repair of the mortgaged premises.

15

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

16

section is amended by adding a subsection to read:

17

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

18

Entry of Security].--

19

* * *

20

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

21

respect to an improvement to a residential property shall, upon

22

petition or motion to the court by the owner or a party in

23

interest, be discharged as a lien against the property when:

24

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

25

contractor; or

26

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

27

contract price owed by the owner to the contractor.

28

Section 4.  This act shall apply as follows:

29

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

30

act shall apply to contracts entered into on or after the

- 9 -

 


1

effective date of this section.

2

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

3

to contracts entered into or renewed on or after the

4

effective date of this paragraph.

5

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

- 10 -