Recent changes to Pennsylvania's Mechanics' Lien Law, effective October 10, 2009, expand the availability of up-front waivers of mechanics' liens for residential construction projects.  These changes to the law expose subcontractors and materials suppliers to potential losses due to non-payment by the property owner.  When mechanics' lien rights are not available due to an up-front waiver, subcontractors and materials suppliers must consider other legal protections before entering into a contract to perform work or materials.
 
Prior to the amendments to Pennsylvania's Mechanics' Lien Law, up-front waivers of mechanics' liens were permitted only when the construction contract was for at least one million dollars.   The 2009 amendments modify this provision so that up-front waivers can be obtained on any residential property which is less than three stories in height (not including a basement), regardless of the amount of the contract.  This means that most single-family residential construction projects now qualify for an up-front mechanics' lien waiver.  
 
These changes to the law make it more likely that a contract between the property owner and a general contractor will contain an up-front mechanics' lien waiver on residential construction projects.  Because subcontractors and materials suppliers are generally bound by any up-front mechanics lien waiver found in the general contractor's contract with the property owner, it is essential that subcontractors and materials suppliers examine that contract before submitting a bid or providing materials.  A search of public records should also be conducted to determine if a waiver of mechanics' liens has been filed.  Subcontractor and materials suppliers can also insist on certain contractual language in their contracts with the general contractor which will limit their exposure to losses resulting from the property owner's non-payment or from a general contractor which fails to pay its subcontractors and materials suppliers.
 
Up-front mechanics' lien waivers will likely become standard again as a result of the changes to the law, and subcontractors and materials suppliers are likely to be affected by these up-front waivers.  We recommend that subcontractors and materials suppliers consult an attorney before submitting a bid in order to discuss their mechanics' lien rights or other legal recourse in the event of non-payment. 

 
For more information and legal advice regarding Mechanics Liens in Maryland, Pennsylvania and New Jersey, please contact:
 
 

Ryan P. Siney