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Release of Liens

Section H-1
Pennsylvania Construction Lien Law

The Joint Committee recommends that companies involved in a construction project have a thorough understanding of the lien laws in states in which they perform work.

In Pennsylvania, the State Legislature made significant changes to its construction lien law known as the Mechanic's Lien Law; 49 Purdon's Pennsylvania Consolidated Statutes Annotated Section 1101 et seq. These changes went into effect January 2007. Prior to the changes, construction owners were able to obtain a single blanket waiver of mechanics lien, file it with the Prothonotary's Office on the first floor of the City-County Building before construction began and thereby create a bar to any mechanics liens being filed against a project. Under the changes to the Mechanics Lien Law, this type of "No Lien" agreement is prohibited as against public policy unless a payment bond is in place assuring payment. Without a payment bond being in place, only partial lien waivers can be obtained and only to the extent that the cost of the work covered by the waiver has been paid. Note that this is on private projects only. Public projects cannot be liened.

Some of the other significant changes to the Mechanic's Lien Law effecting commercial construction include:

expanding lien rights beyond the prime contractor and first-tier subcontractors to include second-tier subcontractors;
extending a claimant's time to file a lien from four-months to six-months after completion of work, and;
removing the "Preliminary Notice" requirement to file a lien prior to completion of work.

The changes to the Mechanic's Lien Law went into effect January 2007 and have varying levels of impact to businesses involved in the construction process. The different stakeholders within the construction industry are poised to improve the lien law for their membership. The Joint Committee will continue to track this issue and update this recommendation to coincide with any law changes from a governing body. The Joint Committee further recommends that construction companies consult legal counsel concerning lien law issues.

REFERENCES:
Local & State Laws

Glossary Terms for the Best Practices Guide

History of Recommendation:
Approved March, 2009

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