1. Mechanic’s Lien Claims: How
Recent Changes May Affect Your
Right to Assert a Mechanic's Lien
KAPLIN STEWART
Presented by:
Robert A. Korn, Esq. & Joshua C. Quinter, Esq.
September 23, 2016

2. SCOPE OF THE LIEN
• Applies to labor and material provided in the
“erection or construction” or “alteration or
repair” of an improvement to real estate.

3. WHO CAN FILE A LIEN?
• Lien may only be filed by a “Contractor” or
“Subcontractor”
• “Contractor” supplies labor or material under a contract
directly with Owner or tenant of the Owner.
• “Subcontractor” supplies labor or material under a
contract with a Contractor or supplies labor or material
under a contract with a Subcontractor to a Contractor.

4. BARRED FROM FILING LIEN
• Design professional (such as Architect or Engineer) may
be a “Contractor” only if its contract with an Owner
includes construction supervision or superintendance in
addition to design services.
• A party who has a contract with a material supplier.

5. BARRED FROM FILING LIEN
• Design Professional which contracts with
anyone other than Owner or Tenant.
• Employees of the owner, regardless of the
nature of the work performed.

6. PROPERTY PROTECTED
FROM LIENS
• Publicly owned real estate is not subject to
a mechanics’ lien.
• Property subject to a valid waiver of lien is
also immune from a mechanics’ lien.

7. CAN THE RIGHT TO FILE A LIEN
BE WAIVED?
• Lien rights can be waived if the property is “residential”
(not “residential” if the construction is more than three
stories in height, not including basement level).
• Upfront lien waivers are against public policy, unlawful,
and void for non-residential buildings.
• Upfront waivers are permissible if contractor posts a
bond guaranteeing payment.

8. EFFECT OF THE LIEN
• A mechanics’ lien is a lien against real property and will
encumber the real property itself.
• The lien attaches to the owner’s interest in the property
but not against personal or other assets of the Owner.
• Lien attaches to a fee or leasehold interest in real
estate.

9. PRIORITY OF LIENS
• The Lien Law provides that [t]he lien of a claim filed under
this act shall take effect and have priority “as of the date of
the visible commencement upon the ground of the work of
erecting or constructing the improvement…”.
• If the work is alteration and repair, Section 1508(b) provides
that the lien shall take effect and have priority “as of the
date of the filing of the claim”.
• Many disputes center on establishing the date on which work
commenced.

10. IS SITE WORK LIENABLE?
• “Erection, construction, alteration or repair”
includes traditional site work (e.g. utility
work, excavation, grading, paving in order to
supply services to the improvement or when
such work is incidental to the erection,
construction, alteration or repair of a
building).

11. NOTICE REQUIREMENTS
• Presently, a subcontractor must provide “formal notice”
of intention to file lien at least 30 days before the
mechanics’ lien is filed.
• The owner of the property subject to the lien must be
served by first class, certified mail or personal service.
• The coming changes to the law significantly impact the
notice requirements by adding another layer (more on
that later)

12. TIME LIMITATION FOR FILING THE
LIEN
• Claim must be filed within six (6) months after last date
labor or material was provided by claimant.
• Returning to the project to perform punchlist work will
not extend the six month rule.
• Since the work must be continuous, returning to the
project to perform minor work or delivering material to
the project, after a hiatus, will usually be construed as
an attempt to circumvent the six month rule.

13. PROSECUTING THE LIEN CLAIM
• One cannot execute on a lien claim without securing a judgment.
• The action to obtain judgment on the lien claim must be
commenced within 2 years from the date of filing, unless the
owner of the project extends the time in writing.
• A verdict must be recovered or judgment entered within 5 years
from the date of filing of the claim and final judgment must be
entered on the verdict within 5 years.
• The claim will be lost unless prosecuted within these time
limitations.

14. Can an Owner/Tenant Limit its
Liability to the Lien and Contract
Price?
• Yes, if the Subcontractor has actual notice of
the contract price and payment terms of the
Owner/Tenant contract with the contractor, or
if the contract or pertinent provisions are filed
with the Prothonotary, an Owner or Tenant can
limit their liability to the unpaid contract
balance.

15. Domb Case (Superior Court
of Pennsylvania)
• Appellant sent a preliminary notice of intent
to lien
• Appellant walked off the job because of non-
payment
• Act required the giving of preliminary notice
on or before completing work
• Because Appellant did not complete work, the
preliminary notice was ineffective and the lien
itself could not be perfected

16. Changes Are Coming
• In October 2014, Governor Corbett signed into
law changes to the Mechanic’s Lien statute
that are scheduled to take effect on December
31, 2016
• The changes relate to the manner in which
notice is given on projects and add another
level of notice
• The Department of General Services will play a
large role in large lien claims as a result

17. The Basics to the Changes to the
Mechanic’s Lien Law
• Creates a state wide electronic “State
Construction Notices Directory” to be operated by
DGS for purposes of providing notice
• Uses model in place in Utah since 2005
• Adds possible defenses to lien claims for owners
and contractors
• Includes a mechanism and accompanying penalty
for efforts to prevent filings in directory

18. New Notice Provisions
For all projects with a value of $1.5 million or more,
the following forms of notice are now “in play”:
(1) Notice of Commencement
(2) Notice of Furnishing
(3) Notice of Completion
(4) Notice of Non-Payment
Note: The statute is not clear on how the $1.5
million will be measured, but it seems safe to
assume it relates to total project value

19. Notices of Commencement
• The filing of a Notice of Commencement is optional; but
the owner does not have the benefit of the notice
defense if it is not filed
• The owner can file the notice or delegate the obligation
to file with the directory to the general contractor as
part of the contract
• Notice must be filed in the directory before any work
commences and be posted at the project site to be
effective
• Owner must also make reasonable efforts to make sure
the notice is part of the contract documents

20. What goes in the Notice of
Commencement?
The statute is very specific about what must be
in the Notice of Commencement. The
requirements are:
(1) The full name, address and e-mail
address of the contractor.
(2) The full name and location of the
“searchable” project.
(3) The county in which the
“searchable” project is located.

21. What goes in the Notice of
Commencement?
(4) The legal description of the
property upon which the
improvements are being made,
including the tax ID number of
each parcel included in the
“searchable” project.
(5) The full name, address, and e-mail
address of the “searchable”
project owner of record of the
property and the “searchable”
project being constructed.

22. What goes in the Notice of
Commencement?
(6) If applicable, the full name,
address and e-mail address of a
surety for the performance and
payment bonds and the bond
numbers.
(7) The unique identifying
number that is assigned to
the Notice of
Commencement pursuant
to section 501.1(e)(1).

23. Notices of Furnishing
• If the owner or general contractor file a Notice of
Commencement with the directory, then
subcontractors and suppliers must file a Notice of
Furnishing within 45 days of starting work or
delivering materials to the project
• The failure to file a Notice of Furnishing after a
Notice of Commencement results in the forfeiture
of lien rights
• General contractors do not have to file Notices of
Furnishing

24. What goes in the Notice of
Furnishing?
The statute is likewise very specific about what goes
into a Notice of Furnishing:
(1) A general description of the labor
or materials furnished.
(2) Full name and address of the
person supplying the services or
items.
(3) Full name and address of the
person that contracted for the
services or items.
(4) A description sufficient to identify
the searchable project, based on
the description in the Notice of
Commencement.

25. What Does the Notice of
Furnishing Look Like?
The statue specifically says the notice should be
in “substantially in the following form”:
Notice of Furnishing
To:(Name of searchable project owner)
(Address of searchable project owner)
(Notice of Commencement Number)
Please take notice that the undersigned is
performing certain work or labor or furnishing
certain materials to (Name and address of other
contracting party) …

26. What Does the Notice of
Furnishing Look Like?
… in connection with the improvement to the
real property located at (Project location). The
labor, work or materials were performed or
furnished first, or will be furnished first, on
(date).
(Name and Address of Lien Claimant)
(Name and capacity of party signing for lien
claimant)
(Address of Signing Party)
(Date)

27. Notice of Completion
• The filing of a Notice of Completion is optional, for
informational purposes only, and has no proscribed
form
• Filed by owner or general contractor within 45
days of actual completion of the work measured as
issuance of certificate of occupancy and
acceptance of work by owner or no work for 30
consecutive days
• May not be used for other purposes, such as place
holder to measure last date worked or start of
warranty obligations

28. Notices of Non Payment
• The filing of a Notice of Non Payment is
optional, for informational purposes only, and
has no proscribed form
• No time limit on the filing of notice and no
impact on lien rights; designed to allow for
resolution of possible claims
• Filing of Notice of Non-Payment does not
excuse failure to file Notice of Furnishing

29. Basic Logistics of the State
Construction Notices Directory
• Directory to be run by DGS, including the operation
of the website
• Scheduled to go on-line by December 31, 2016, but
it seems unlikely DGS will be ready
• DGS already saying it will do nothing more than
“process papers”
• Mechanism provided for parties using the directory
to receive notice of filings electronically

30. Does the State Construction Notices
Directory Otherwise Effect Lien
Rights?
• No, with the exception of these new notice
provisions, nothing changes.
(1) Parties can still contract to waive
liens as before
(2) The time requirements for Formal
Notice of Intent and to file a lien
itself remain the same
(3) The information that must be
included in the lien itself is
unchanged
(4) Importantly, the lien law will still
be strictly construed

31. A Few Unanswered Questions
About the Amendments
• Does the $1.5 million threshold apply to the entire
project or each contract?
• Is a Notice of Commencement effective if filed
before work starts if it does not show up in the
directory before work starts?
• What happens when something is misfiled in the
directory, the Directory goes down, or DGS falls
behind in recording notices?
• Can, and how, will parties try to deal with these
provisions in their contracts?

32. Thank you
KAPLIN STEWART
ROBERT A. KORN JOSHUA C. QUINTER
(610) 941-2512 (610) 941-2521
rkorn@kaplaw.com jquinter@kaplaw.com
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