Changes for Securing Lien Rights in Pennsylvania Coming 2016
New Notice procedures in Pennsylvania become effective for qualifying projects commenced on or after the date the online Construction Notices Directory become operational (scheduled for December 31, 2016).
What are the changes and how does it affect those contracting for work in Pennsylvania?
There are several changes that are taking place. Under current law, there is only one notice requirement – the Formal Notice.
In October, 2014, Act No. 142 was enacted amending the Pennsylvania Mechanic’s Lien Law to create a more structured notice procedure for owners and subcontractors to abide by, on commercial contracts which are $1.5 MIL or greater.
The act provides for:
- the filing of a Notice of Commencement,
- a Notice of Furnishing,
- a Notice of Completion and
- a Notice of Non-Payment.
The new law is modeled after Utah’s State Construction Registry which was implemented in 2005. The purpose of the law is to protect commercial property owners from double paying and to avoid subcontractor liens. By registering the project through the construction registry, the owner can identify the subcontractors working on the project, to ensure that all subcontractors have been paid before making final payment to the general contractor.
Who must file the Notice of Commencement on the construction registry and what is the deadline?
A Notice of Commencement must be filed by the owner prior to the start of the construction project and must contain
- the full name, address and email address of the contractor;
- the full name and location of where the work is being performed;
- the county in which the project is located;
- a legal description of the property, including the tax identification number of each parcel and,
- the full name, address and email address of the project owner
- if applicable, the full name, address and email address of the surety for the performance and payment bond along with the bond numbers
In addition to posting the Notice of Commencement on the construction registry, it must also be posted on the jobsite until the project is complete. If the Notice of Commencement is not timely filed, subcontractors are relieved from an obligation to file a timely Notice of Furnishing.
What is the requirement for the Notice of Furnishing?
A Notice of Furnishing must be filed in the construction registry by all first- or second-tier subcontractors or suppliers within 45 days from first furnishing labor or materials. The notice must contain
- a general description of the labor and/or materials to be furnished
- the full name and address of the person supplying the labor and/or material
- the full name and address of the person contracting for the labor and/or material; and
- a description sufficient to identify the project, based on the description in the Notice of Commencement
What is the Notice of Completion and how does it affect me?
The owner may file a Notice of Completion, for informational purposes, to inform all parties that the project has been completed and accepted by the owner. The notice will be submitted by the construction registry to all subcontractors who have filed a Notice of Furnishing.
Are there any other notices of which we should be aware?
Subcontractors who have not received full payment for their materials or services, may file a Notice of Nonpayment in the directory for informational purposes.
What actions should we be taking now to prepare us for the new changes in the law?
Members of the construction industry should begin now to familiarize themselves with the changes to the lien law to determine how to change their business practices to meet the new requirements. Utah’s state law and precedent can be a useful tool to help owners and subcontractors begin to understand the process.