Pennsylvania's Mechanics Lien Law of 1963 was amended in late 2014 to require the commonwealth's Department of General Services to create an internet-based State Construction Notices Directory. As required by the law, the directory went live on Dec. 31, 2016, providing a standardized, statewide, internet-based system for construction notices. This statutory scheme imposes new requirements on project owners, contractors, and subcontractors, compliance with which can drastically affect those parties' rights under the Mechanics Lien Law. Practitioners representing any of the traditional parties in a construction matter should be sure to familiarize themselves with these new provisions, and advise their clients accordingly.

The Basics of the New Provisions

Under the new provisions of the Mechanics' Lien Law, the directory provides a database for any “searchable project,” defined as “a project consisting of the erection and construction, or alteration or repair, of an improvement costing a minimum of $1,5 million,” 49 P.S. Section 1201(18). Pursuant to the new scheme, the owner of a searchable project (or the contractor on a searchable project, with the owner's permission) may file a notice of commencement with the directory. The notice of commencement must be filed prior to the commencement of any labor, work or furnishing of materials for the project, and must identify, among other things, the owner, contractor and location of the project. See 49 P.S. Section 1501.3(a). Additionally, if a notice of commencement is filed, the owner must post a copy of the notice at the project site before work begins, and must also (along with the contractor) “make reasonable efforts” to ensure that the notice is a part of the contract documents provided to subcontractors on the project.

The filing of a notice of commencement on a searchable project also triggers certain obligations for any subcontractors performing work or providing material for the project. Within 45 days of first providing labor or materials to a searchable project, each subcontractor must file a notice of furnishing with the directory. The notice of furnishing must identify, among other things, the subcontractor and other contracting party and must provide a general description of the labor or materials furnished for the project. Upon completion of work on a searchable project, the owner may file a notice of completion, and any subcontractors who has not received full payment for their work may file a notice of nonpayment.

These new provisions raise interesting questions for practitioners, and will affect the way they advise their clients, regardless of which side of a construction project they are representing.

Project Owners

For project owners, the creation of the directory provides an additional layer of protection from mechanics' lien claims. It should be emphasized that, for owners of a “searchable project,” participation in the directory is voluntary, as the statute clearly provides that an owner “may,” rather than “shall,” file a notice of commencement. If the owner of a searchable project faces the possibility of exposure to mechanics' lien claims, there is no downside for an owner to file a notice of commencement. Once a notice of commencement has been filed, any subcontractor on the project is obligated to file a notice of furnishing, and a subcontractor's failure to follow those notice requirements forfeits the right to file a lien claim.