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A Primer on the New Mechanics' Lien Law Amendments

In June 2006, Governor Rendell signed into law amendments to the Pennsylvania Mechanics' Lien Law of 1963. While these amendments change several aspects of the 1963 law, the most significant changes were made with regard to waivers of mechanics' liens. Specifically, the amendments slightly change the technical requirements for filing and perfecting a mechanics' lien, and extend the right to file a mechanics' lien to sub-contractors. More importantly, the amendments render a mechanics' lien waiver, given in advance of receipt of actual payment for work, unenforceable in non-residential construction projects.

However, certain exceptions do apply. For example, the "residential project exception" allows contractors and subcontractors to waive their lien rights on a residential project if the total contract price between the owner and the contractor is less than $1 million. A second exception, the "payment bond exception," allows a subcontractor to waive its lien rights on all nonresidential projects and on residential projects of $1 million or more, if the contractor posts a payment bond for labor and materials.

Overall, the amendments are "contractor-oriented." However, protection to certain lenders are also provided by amendments that grant purchase money mortgages and certain open-end mortgages "super-priority" over mechanics' lien claims. The amendments to the Pennsylvania Mechanics' Lien Law of 1963 will take effect January 1, 2007.

For more information, see the Mechanics' Lien Law of 1963, 49 P.S. § 1101, et. seq.

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