PA’s Online Mechanic’s Lien Directory to go Into Effect in 2016
Pennsylvania’s legislature amended its Mechanic’s Lien Law to require the creation of an online construction notices directory where contractors will be required to file notices of furnishing of their services or materials in order to be able to file a mechanic’s lien in the event of non-payment for labor or services. The amendment was entered in prior legislative sessions but failed to pass, with various legislators stating that the creation of an online directory was unduly burdensome to both owners and contractors. Nevertheless, Pennsylvania joined other states like Ohio and Iowa and implemented an online construction notices directory where projects will be registered by owners and contractors will file notices of furnishing and mechanic’s lien claims. The directory is slated to be effective by January 1, 2016, although, the legislature could delay implementation.Following the establishment of the directory, an owner may register a project in excess of $1,500,000 on the online directory. If a project is registered, the owner will be required to conspicuously post a copy of the notice of commencement under the Mechanic’s Lien Law at the site of a searchable project before physical work commences on the project. The Notice will include the unique identifying number assigned to the project under the law. Owners and their counsel will then need to ensure that each contract for a searchable project includes written notice to contractors that the contractor’s failure to file a Notice of Furnishing under the act will result in the loss of the contractor’s lien rights. The form of the notice is included in the law.Although both owners and contractors have new obligations following the amendment, title companies and banks will appreciate the certainty provided by the act. Bank’s counsel and title companies will be able to check the directory of a searchable project to see which contractors have filed notices of furnishing, and will then be able to request verification that those contractors have been paid. Attorneys for developers, contractors, banks and title companies will all need to familiarize themselves with the changes after the directory goes into effect.Derek Dissinger, Esquire is an attorney in the Barley Snyder’s Finance & Creditors’ Rights and Real Estate groups.