Purely Public Purpose Exemptions from Liens

Recently, in Carter-Jones Lumber Co. v. Northwestern PA Humane Society, 913 A.2d 1002 (Pa.Cmwlth. 2006), the Court found that an animal shelter served a purely public purpose and thus rendered it exempt from mechanics’ liens under Section 1303(b) of the PA Mechanics’ Lien Law of 1963 (49 P.S. §1101, et seq.). In rendering its decision, the Court reviewed case law and determined that Courts have evaluated four factors in considering whether the purely public purpose exception applies. Those four factors are: (1) the public’s access to the services provided by the entity; (2) whether the entity’s function with respect to the property is a governmental function or a propriety function, (3) whether the entity operates with the possibility or motive of profit, and (4) whether allowing execution upon the liens would disrupt an essential public service.

However, the Court failed to address how, if at all, the “substitute remedy” provision of the PA Public Works Contractors’ Bond Law of 1967 (8 P.S. §191, et seq.) interplays with this purely public purpose exemption. Specifically, the Public Works Contractors’ Bond Law was designed to, among other things, provide substitute remedies for subcontractors who are excluded from the protections afforded by Mechanics' Lien Law of 1963. However, the Bond law only applies in certain circumstances and has specific definitions. It is unlikely that a nonprofit or its property will fall within the applicable definitions. Thus, given the decision in Carter-Jones, in a purely public purpose project, the subcontractors are left without the mechanics lien remedy or the substitute remedies.

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