As you heard about from Jason Copley, Cohen Seglias at the AGMA Annual Meeting, new changes to the Pennsylvania Mechanic’s Lien Law will take effect on/after January 1, 2017 via a new website known as the “State Construction Notices Directory.”
This website is intended to streamline notices on non-residential construction projects valued at$1,500,000 or more (aka “searchable projects”).
Project owners and contractors will use it on searchable projects to provide four new types of notices: commencement, furnishing, completion and nonpayment.
The owner or owner’s authorized contractor will file with the directory a Notice of Commencement before any work or materials are supplied to a searchable project. Each searchable project will be assigned a unique identifying number. The Notice of Commencement must also be posted conspicuously at the job site. Any party preparing a Notice of Commencement must make reasonable effort to include the Notice in contract documents relating to the project. This will require project participants to carefully review, and in some cases, revise their standard contract documents.
If a voluntary Notice of Commencement is filed, contractors and subcontractors must file a Notice of Furnishing with the directory within 45 days of beginning work or supplying materials to the project.
Must contain the following information:
1. General Description of labor or materials furnished
2. Name and address of person providing labor or materials
3. Name and address of person who contracted for the labor or materials
4. Description of the searchable project based on Notice of Commencement
Failure to file the Notice of Furnishing and substantially comply with the statutory requirements forfeits the right to file a lien claim.
Within 45 days after actual completion of work on a searchable project, the owner may file a Notice of Completion in the directory. The directory will transmit this notice to all subcontractors that have filed Notices of Furnishing.
Then, any Claimant that has not been paid in full for work performed or materials supplied may file in the directory a Notice of Nonpayment with the owner or the party with whom it contracted “for informational purposes only.” This notice is not mandatory.
To perfect a lien claim, Claimants must still comply with all other mandatory notice and procedural requirements that have long been in effect under the Mechanic’s Lien Law.
The directory will provide notification by email, fax or mailing of a filing of any notice to any party that has filed a Notice of Commencement, Notice of Furnishing or Notice of Completion.
If an owner fails to register a project via online database in the first place, the above notice provisions do not apply, and the participants will approach mechanic’s liens in the manner to which they have become accustomed under Pennsylvania’s lien law. The amendments do not otherwise change Pennsylvania’s lien law.
Please remember, these new construction notice provisions will be in addition to, and not in replacement of, the existing notice provisions in the mechanic’s lien statute. Subcontractors or suppliers must still provide formal notice to the property owner of intention to file a mechanic’s lien claim 30 days before actually filing the claim. The claim itself must be filed within six months of the last day on the job.
SOME LIKELY IMPACTS:
1. Notices of Commencement will provide easier access to info (e.g., Owners must now include certain payment bond information in the Notice of Commencement that has historically been difficult for some subcontractors to obtain at the back end of a project)
2. May increase use of joint check payments to protect from liens
3. Changes to construction contracts to include Notice of Furnishing
4. Faster conversion to permanent financing, which will lead to faster payment.