Mechanic’s Liens Archives

On October 16, 2013, the Superior Court of Pennsylvania issued a new opinion relating to mechanics’ liens. While seemingly academic on its face, the decision has practical ramifications for the ability of contractors to enforce a lien and ultimately get paid in certain circumstances.

Until very recently, contractors performing excavation and site preparation work did not have the right to file a mechanic’s lien in Pennsylvania unless a building or other improvement was actually constructed at the site. That rule abruptly changed on May 17, 2013 in a decision by the Pennsylvania Superior Court in B.N. Excavating, Inc. v PBC Hollow-A, L.P., et. al. Based on this decision, contractors now have the right to file mechanic’s liens in Pennsylvania for excavation and site preparation work even if a building or other structure is not ultimately constructed at the site. This is a significant change in the application of the Pennsylvania Mechanic’s Lien Law.

In Pennsylvania, a contractor may recover damages by the enforcement of a mechanics lien or by quantum meruit for work performed even where the contractor’s written home improvement contract was invalid.

A prior holding by the Supreme Court of New Jersey in Craft v. Stevenson Lumber Yard, Inc., declared that a construction lien claimant has a “statutory duty” under the Construction Lien Law “to allocate payments to the accounts from which they were derived”. In other words, contractors, subcontractors, and suppliers are not permitted apply payments originating from an owner on one project to another project to do things like pay off older debt. The Appellate Division’s recent decision in L&W Supply Corp. v. Joe DeSilva enlarges that obligation to one of inquiry based on reasonable suspicion.

After years with little to no change, the legislature in Pennsylvania has spent a good amount of time making revisions to the Mechanic’s Lien Law recently. Just last year we reported on amendments being considered; and more changes are being proposed to the statute as the General Assembly begins its 2013 session.

Contractors who wait too long can lose their right to file a mechanic’s lien.

The Pennsylvania Supreme Court has agreed to hear the appeal of the Bricklayers of Western Pennsylvania Combined Funds v. Scott’s Development case, a move that could determine whether the Pennsylvania Mechanics’ Lien Law will be strictly or liberally interpreted.

After years of doing little to change the Mechanic’s Lien Law, it seems the Pennsylvania Legislature now can’t leave it alone. Significant changes have gone into effect in the last several years, and the legislature has continued to dabble in it regularly.

In the case of Bricklayers of Western Pennsylvania Combined Funds, Inc. v. Scott’s Development Company, the majority of the Pennsylvania Superior Court, sitting en banc, overruled the lower court’s decision to dismiss a mechanics’ lien claim by the trustee of the employee benefits fund for the union on the basis that the trustee lacked standing to file the lien under the Pennsylvania Mechanics’ Lien Law (hereinafter “Lien Law”) for unpaid contributions to union members because neither the trustee nor the union were a “subcontractor” under the Lien Law. Under the Lien Law, only a “contractor” and “subcontractor” are permitted to file a lien claim against the owner of real property for debts due to a “contractor” or “subcontractor” relating to improvements made to the property. Under the Lien Law, a “subcontractor” is defined as:

Earlier this month, the Pennsylvania Superior Court for the first time issued some very important analysis of the lien priority amendments to the Mechanic’s Lien Law in Commerce Bank/Harrisburg, N.A. v. Kessler.