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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY BROWNE, ROBBINS, BOSCOLA, ORIE, TOMLINSON, WAUGH, WOZNIAK, VANCE, EARLL, FOLMER AND WONDERLING, MARCH 2, 2009 |
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| REFERRED TO LABOR AND INDUSTRY, MARCH 2, 2009 |
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| AN ACT |
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1 | Amending the act of August 24, 1963 (P.L.1175, No.497), entitled |
2 | "An act to codify, amend, revise and consolidate the laws |
3 | relating to mechanics' liens," further providing for |
4 | definitions, for waiver of lien by claimant, for right to |
5 | limit claims to unpaid balance of contract price and for |
6 | priority of lien. |
7 | The General Assembly of the Commonwealth of Pennsylvania |
8 | hereby enacts as follows: |
9 | Section 1. Sections 201(14), 401, 405 and 508 of the act of |
10 | August 24, 1963 (P.L.1175, No.497), known as the Mechanics' Lien |
11 | Law of 1963, amended June 29, 2006 (P.L.210, No.52), are amended |
12 | to read: |
13 | Section 201. Definitions.--The following words, terms and |
14 | phrases when used in this act shall have the meaning ascribed to |
15 | them in this section, except where the context clearly indicates |
16 | a different meaning: |
17 | * * * |
18 | (14) "Residential [building] property" means property on |
19 | which there is or will be constructed a residential building not |
20 | more than three stories in height, not including any basement |
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1 | level, regardless of whether any portion of that basement is at |
2 | grade level, or which is zoned or otherwise approved for |
3 | residential development on which there is or will be constructed |
4 | a residential building not more than three stories in height, |
5 | not including any basement level, regardless of whether any |
6 | portion of that basement is at grade level, planned residential |
7 | development or agricultural use, or for which a residential |
8 | subdivision or land development plan or planned residential |
9 | development plan has received preliminary, tentative or final |
10 | approval on which there is or will be constructed a residential |
11 | building not more than three stories in height, not including |
12 | any basement level, regardless of whether any portion of that |
13 | basement is at grade level, pursuant to the act of July 31, 1968 |
14 | (P.L.805, No.247), known as the "Pennsylvania Municipalities |
15 | Planning Code." |
16 | Section 401. Waiver of Lien by Claimant.-- |
17 | (a) Residential [Buildings] Property. |
18 | [(1)] A contractor or subcontractor may waive his right to |
19 | file a claim against residential property [for the erection, |
20 | construction, alteration or repair of a residential building, in |
21 | which the total contract price between the owner and the |
22 | contractor is less than one million dollars ($1,000,000),] by a |
23 | written instrument signed by him or by any conduct which |
24 | operates equitably to estop such contractor from filing a claim. |
25 | [(2) (i) A subcontractor may waive his right to file a |
26 | claim against property for the erection, construction, |
27 | alteration or repair of a residential building, in which the |
28 | total contract price between the owner and the contractor is |
29 | less than one million dollars ($1,000,000), by a written |
30 | instrument signed by him or by any conduct which operates |
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1 | equitably to estop him from filing a claim. |
2 | (ii) A subcontractor may waive his right to file a claim |
3 | against the property, irrespective of the contract price between |
4 | the owner and the contractor, of a residential building by a |
5 | written instrument signed by him or by any conduct which |
6 | operates equitably to estop him from filing a claim, provided |
7 | the contractor has posted a bond guaranteeing payment for labor |
8 | and materials provided by subcontractors.] |
9 | (b) Nonresidential Buildings. |
10 | (1) Except as provided in subsection [(a)(1)] (a), a waiver |
11 | by a contractor of lien rights is against public policy, |
12 | unlawful and void unless given in consideration for payment for |
13 | the work, services, materials or equipment provided and only to |
14 | the extent that such payment is actually received. |
15 | (2) Except as provided in subsection [(a)(2)] (a), a waiver |
16 | by a subcontractor of lien rights is against public policy, |
17 | unlawful and void, unless given in consideration for payment for |
18 | the work, services, materials or equipment provided and only to |
19 | the extent that such payment is actually received, or unless the |
20 | contractor has posted a bond guaranteeing payment for labor and |
21 | materials provided by subcontractors. |
22 | Section 405. [Right of Owner to Limit Claims to Unpaid |
23 | Balance of Contract Price.--Where the claims of subcontractors |
24 | exceed in the aggregate the unpaid balance of the contract price |
25 | specified in the contract between the owner and the contractor, |
26 | then if the subcontractor has actual notice of the total amount |
27 | of said contract price and of its provisions for the time or |
28 | times for payment thereof before any labor or materials were |
29 | furnished by him, or if such contract or the pertinent |
30 | provisions thereof were filed in the office of the prothonotary |
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1 | in the time and manner provided in section 402, each claim |
2 | shall, upon application of the owner, be limited to its pro-rata |
3 | share of the contract price remaining unpaid, or which should |
4 | have remained unpaid, whichever is greatest in amount at the |
5 | time notice of intention to file a claim was first given to the |
6 | owner, such notice inuring to the benefit of all claimants.] |
7 | Right to Limit Claims to Unpaid Balance of Contract Price.-- |
8 | (a) Contractor. The maximum amount for which an interest in |
9 | real property may be subject to a lien under this act for one or |
10 | more lien claims filed pursuant to this act shall not be greater |
11 | than the price of the contract between the owner and the |
12 | contractor less the amount of payments made by the owner to the |
13 | contractor or to another lien claimant prior to receipt by the |
14 | owner of a notice of intention to file a lien claim pursuant to |
15 | section 501. |
16 | (b) Subcontractors. |
17 | (1) In the case of a lien claim filed by a subcontractor in |
18 | privity of contract with the contractor, the maximum amount for |
19 | which an interest in real property may be subject to a lien |
20 | under this act for one or more lien claims filed under this act |
21 | shall not be greater than the lesser of: |
22 | (i) the amount provided in subsection (a); or |
23 | (ii) the price of the contract between the contractor and |
24 | subcontractor less the amount of payments, if any, justifiably |
25 | made prior to receipt by the contractor of a copy of a notice of |
26 | intention to file a claim by the contractor to the subcontractor |
27 | or to another lien claimant in privity of contract with the |
28 | subcontractor. |
29 | (2) In the case of a lien claim filed by a party of privity |
30 | in contract with a subcontractor, the maximum amount for which |
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1 | an interest in real property may be subject to a lien under this |
2 | act for one or more lien claims filed under this act shall not |
3 | be greater than the lesser of: |
4 | (i) the amount provided in subsection (a); or |
5 | (ii) the price of the contract between the contractor and |
6 | subcontractor with whom the party has contracted, less the |
7 | amount of payments justifiably made, if any, prior to receipt by |
8 | the contractor of a copy of the notice of intention to file a |
9 | claim to the subcontractor or to another lien claimant; or |
10 | (iii) the price of the contract between the subcontractor |
11 | and the party less the amount of payments justifiably made, if |
12 | any, by the subcontractor to the party. |
13 | (c) Breach. For purposes of determining the maximum amount |
14 | for which an interest in real property may be subject to a lien |
15 | in the event that a contractor or subcontractor is in breach |
16 | under the terms of a contract to which it is a party, the price |
17 | of the contract shall be deemed to have been reduced by the |
18 | damages incurred by the nonbreaching party to the contract as a |
19 | result of the breach. |
20 | (d) For purposes of this section. |
21 | (1) The term "price of the contract" shall include amounts |
22 | due for labor or material which are furnished as a result of: |
23 | (i) a contract; |
24 | (ii) a written amendment to a contract; or |
25 | (iii) any change order or other directive for labor or |
26 | materials in addition to the scope of work under an initial |
27 | contract, provided that the lien claimant has notified the party |
28 | with whom it is in privity of contract within seven (7) days of |
29 | the receipt of the change order or other directive that the |
30 | furnishing is alleged to be in addition to the scope of work |
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1 | under the contract; or |
2 | (2) in the case of a supplier, "price of the contract" |
3 | includes a delivery or order slip signed by the owner, |
4 | contractor or subcontractor, or an authorized agent of any of |
5 | them. |
6 | (3) "Price of the contract" does not include an agreement |
7 | predominantly intended to reduce the credit risk of a party, |
8 | including a joint check arrangement, payment guarantee or |
9 | similar credit agreement. |
10 | Section 508. Priority of Lien.--The lien of a claim filed |
11 | under this act shall take effect and have priority as follows: |
12 | (a) Except as set forth in subsection (c), in the case of |
13 | the erection or construction of an improvement, as of the date |
14 | of the visible commencement upon the ground of the work of |
15 | erecting or constructing the improvement. |
16 | (b) Except as set forth in subsection (c), in the case of |
17 | the alteration or repair of an improvement, as of the date of |
18 | the filing of the claim. |
19 | (c) Any lien obtained under this act by a contractor or |
20 | subcontractor shall be subordinate to the following: |
21 | (1) A purchase money mortgage as defined in 42 Pa.C.S. § |
22 | 8141(1) (relating to time from which liens have priority). |
23 | (2) An open-end mortgage as defined in 42 Pa.C.S. § 8143(f) |
24 | (relating to open-end mortgages), the proceeds of which are used |
25 | to pay all or part of the cost of completing erection, |
26 | construction, alteration or repair of the mortgaged premises |
27 | secured by the open-end mortgage[.] or to secure certain |
28 | advances under 42 Pa.C.S. § 8144 (relating to mortgages to |
29 | secure certain advances). |
30 | (3) Any substitution, refinance or modification of a |
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1 | mortgage referred to under paragraphs (1) and (2). |
2 | Section 2. This act shall take effect in 60 days. |
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