Negative PA Mechanic’s Lien Change Go in Affect in Four Weeks

With the summer signing by Pennsylvania Gov. Tom Corbett, changes proposed by the state's SB 145 will go into effect on Sept. 7 and usher in some pretty significant changes for subcontractors and material suppliers working on residential projects immediately thereafter. NACM Secured Transaction Services’ Chris Ring and some prominent Pennsylvania attorneys characterize the new law as a lose-lose for subs and suppliers pretty much all around.

In essence, the change affects the dollar amount a subcontractor or material supplier can file a lien on, basing it on the amount of the funds owed from the property owner to the general contractor. The subcontractor’s lien rights will now be limited to the amount still owed to the contractor, general contractor.  Nicholas Krawec, Esq., of Bernstein-Burkley PC, noted that amount could, and usually will be, less than the amount owed to the sub or supplier.  He added that “it’s a big deal” for subs and suppliers. But it’s even worse if the homeowner has made full payment.

“Essentially, subcontractors and material suppliers have no lien rights if the property is or is intended to be used as the residence of the owner or subsequent to occupation by the owner or a tenant of the owner,” said Ring.

Homeowners (Re: voters in what is a state election year) have long complained that they should not be dragged into disputes between general contractors and subs/suppliers over payments. However, it was one of the only methods of recourse subs and suppliers could seek in the state.

- Brian Shappell, CBA, CICP, NACM staff writer
An extended version of this story with additional analysis and so much more is available now at NACM's Secured Transaction Services website (www.nacmsts.com) to STS customers. All that is needed is your STS login information. 

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