Transactional

By: William J. Burke, III

The Pennsylvania Mechanics Lien Law of 1963 has been amended by Act 34 of 2009, effective October 10, 2009, to help protect buyers of new homes from the adverse effect of potential mechanics liens, by broadening the scope of residential properties for which lien waivers by contractors will be effective.The legislation also protects title insurers and new home builders.

A lien waiver is a document filed by a general contractor before work begins that, if properly and timely filed, precludes the contractor as well as subcontractors and material suppliers from filing liens against new construction to secure their rights to payment.

Under amendments to the law effective January 1, 2007, blanket lien waivers were declared invalid except for residential construction under contracts where the total contract price was less than $1 million.

The newest amendments expand the scope of residential properties for which lien waivers will be recognized, generally by dropping the contract price threshold and substituting a requirement that the residential buildings be no more than 3 stories, not including basements.

The new legislation should make it easier to obtain title insurance against mechanics liens on projects to which it applies, and will otherwise reduce the risks to purchasers of new construction in projects covered by lien waivers filed under the amended law.

For more information please contact our office.

By: William J. Burke, III

As a result of the economic recession (prompting concerns about contractors’ solvency) as well as amendments to Pennsylvania’s Mechanics Lien Law that broadened mechanics lien rights in significant ways, many title insurance companies are refusing to insure against the possibility of mechanics liens or are imposing additional and sometimes onerous requirements in order to do so. This poses a problem and potentially significant risk for sellers, contractors, buyers, tenants and lenders alike, all of whom must be more cautious about mechanics lien issues than in the past.

For additional information, please contact Bill Burke, and see the article on about the Pennsylvania Mechanics Lien Law this site.