Friday, April 6, 2012

Pennsylvania Bill Would Limit Mechanics Lien Rights on Residences

Legislation recently introduced in the Pennsylvania legislature would limit lien rights for subcontractors and suppliers. Pennsylvania House Bill 1602 removes the ability of subcontractors, suppliers and others that do not have a contract directly with the owner to file a mechanics lien on owner occupied residences when the owner has paid the contractor in full.

The bill requires the homeowner to file a notice when work commences on the project.  This notice would require all subcontractors, suppliers and anyone that performs work but does not have privity with the owner to identify themselves to the owner via a notice of the work they are performing or the materials being provided. The idea is to have the notices filed through a website. Currently, there is no distinguishing factor between Pennsylvania mechancis liens on residential property and Pennsylvania mechanics liens on commercial property.

Under the guise that mechanics liens make it difficult for property owners to sell their properties or refinance their homes, the bill was introduced in the PA legislature and has passed the House.  The Pennsylvania bill follows a national trend where rules regarding the filing of mechanics liens against homeowners of single or double family dwellings has become more and more difficult. In each state, the laws are meant to protect "unsuspecting" homeowner that finds a construction lien has been placed against their home because the contractor has failed to pay his subcontractors or suppliers. Of all the states, the New Jersey construction lien law has the toughest residential construction lien obstacles, requiring that the potential lienor submit its proposed residential construction lien to an American Arbitration Association arbitrator for review and approval before it can be filed. 

House Bill 1602 now heads to the Senate for consideration.

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