Ryan, Morton & Imms LLC
Recently the Pennsylvania legislature adopted an amendment to the Mechanic’s Lien Law which became effective in September 2014. The changes provide additional protections to homeowners against the filing of a mechanic’s lien claim, but it limits the rights of subcontractors.
Under the recent amendments, a homeowner who has paid a general contractor in full cannot have a mechanic’s lien filed against them by a subcontractor. Under the prior law, a homeowner could be held responsible twice – it could pay the general contractor for the job and then be subject to a mechanic’s lien by a subcontractor. The amendment to the law protects the homeowners from this “double payment” risk in the event a general contractor is insolvent. If you are entering into a contract for the construction of a new home or for home renovations or repairs using a general contractor and subcontractors, it may be wise to consult an attorney to determine whether your project falls under the protections given by the Act and what actions can be taken to avoid the double payment risk.
Subcontractors and general contractors must also be aware of the changes in the law. Subcontractors may lose the right to file a mechanic’s lien claim, and the filing of an improper claim could result in sanctions being levied against the subcontractor by the homeowner. The sanctions could include the homeowner’s attorney’s fees and costs of litigation of the lien claim. If the conditions set forth in the recent amendment are met, the sole remedy for a subcontractor is against the general contractor who hired him.
A general contractor may now face claims from a homeowner and a subcontractor. A general contractor may be liable to assume the defense of a homeowner and have to pay the homeowner’s costs of defense including attorney’s fees.