Pennsylvania

Pennsylvania Construction Lien Law

Lien Law Overview

Under the Mechanics Lien Law (“PA MLL”), there are a couple of distinctions between residential and commercial property.

Lien waivers. A contractor or subcontractor may waive the right to file a claim against a residential property by signing a lien waiver or by conduct that operates equitably to keep such contractor from filing a claim. See 49 P.S. § 1401. For nonresidential loans, lien waivers are void as against public policy.

Subcontractor lien limitations. A subcontractor does not have the right to a lien with respect to an improvement to a residential property if:

1. the owner or tenant paid the full contract price to the contractor;
2. the property is or is intended to be used as the residence of the owner or subsequent to occupation by the owner, a tenant of the owner; and
3. the residential property is a single townhouse or a building that consists of one or two dwelling units used, intended or designed to be built, used, rented or leased for living purposes. For the purposes of this paragraph, the term “townhouse” shall mean a single-family dwelling unit constructed in a group of three or more attached units in which each unit extends from foundation to roof with a yard or public way on at least two sides. 49 P.S. § 1301.

Discharge of Lien. A lien claim for improvements on residential property can -in response to a petition or motion by the owner or other party in interest- be discharged by a court as a lien against the property when the contractor has been paid in full. The amount of a lien claim may also be reduced to its unpaid balance in response to a petition or motion by the owner or other party in interest. 49 P.S. § 1510

Under the PA MLL, residential property is defined as follows:
“RESIDENTIAL PROPERTY” means property on which there is or will be constructed a residential building not more than three stories in height, not including any basement level, regardless of whether any portion of that basement is at grade level, or which is zoned or otherwise approved for residential development on which there is or will be constructed a residential building not more than three stories in height, not including any basement level, regardless of whether any portion of that basement is at grade level, planned residential development or agricultural use, or for which a residential subdivision or land development plan or planned residential development plan has received preliminary, tentative or final approval on which there is or will be constructed a residential building not more than three stories in height, not including any basement level, regardless of whether any portion of that basement is at grade level, pursuant to the act of July 31, 1968 (P.L. 805, No. 247), known as the “Pennsylvania Municipalities Planning Code.”

Statutory Form
Not Required

Notary
Not Required

Electronic Signature
Acceptable

Are Title companies required by law to manage construction loan disbursements?

We found no law that “requires” title companies manage the draw disbursement process for construction loans. While title company underwriters have been known to require all funds be disbursed through them for a fee on some larger commercial deals, it does not appear that the same is common for residential construction loans.

1. specific content to be in a NOC form,
2. specific rules for posting of the NOC, and
3. that the NOC is made part of contract documents provided to all subcontractors awarded work on the searchable project. 49 P.S. § 1501.3.

The owner must also conspicuously post a copy of the Notice of Commencement at the site of the project before physical work commences, including the unique identifying number assigned to the Searchable Project. The owner must also take reasonable measures to ensure that the Notice of Commencement remains posted at the Searchable Project site until completion. Both the owner and the contractor must also make reasonable efforts to ensure that the Notice of Commencement is made part of contract documents provided to all subcontractors on the project.

Who files the Notice of Commencement?

Searchable project-owner

Agent Contractor

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When must it be filed?

Before any labor or work begins and any materials are furnished.

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Is a Designee required?

Yes

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Is it required to be posted on the Job Site

Yes

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Preliminary Lien Notifications

Preliminary lien notices are required for searchable projects (projects of $1.5M or greater) that are registered, at the owner’s choice, in the State Construction Notices Directory (“Directory”). The property owner (or its agent) may file a Notice of Commencement (before any labor or work begins and any materials are furnished); may file a Notice of Furnishing (within 45 days after first performing labor or materials for the project); may file a Notice of Completion (within 45 days of the date the work is actually completed); and may file a Notice of Nonpayment if full payment of the work, service or materials has not been provided. Subcontractors may file a Notice of Lien Claim that strictly complies with 49 P.S. § 1502. If the improvement is located in more than one county, notice of the lien claim is only effective in the counties where it is properly filed.

Notice of Completion

For searchable projects (projects of $1.5M or greater), a Notice of Completion may be filed within 45 days of the date the work is actually completed. A copy of the notice is provided -via the states Directory- to all subcontractors and suppliers who filed a Notice of Furnishing.