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Call to Action: Stop Unfair Mechanics’ Liens

Lisa Loper of the Scott Loper Team discusses a bill currently under consideration by the PA State Senate which affects all homeowners throughout the Commonwealth.

We urge you to contact your state senators and representatives to VOTE YES TO PENNSYLVANIA STATE SB 1495 which is an amendment to the Mechanics’ Lien Law of 1963. 

This amendment protects homeowners from having liens placed on their property by subcontractors who have not been paid by the general contractor IF the homeowner has in fact paid the general contractor in full.

Introduced by 14 members of the PA State Senate May 31st of this year with bi-partisan support, the Senate referred it to Labor and Industry but now it is back before the Senate for consideration. If it passes the Senate, it must also pass the House and then go to the Governor for final approval.

Unsuspecting homeowners have mechanics' liens placed on their homes by subcontractors who have not been paid by the general contractor. This has become prevalent throughout the Commonwealth especially since the economic downturn. It is occurring with existing homes and new construction.

Consumers are purchasing new residential construction and even though the buyer purchases title insurance guaranteeing the property to be free and clear of all liens, some months may pass and the owner finds that there is a lien on their new home.  As an example, this happened to many new homeowners in our area when T.H. Properties filed for bankruptcy protection in March 2009.

Another problem with these unfair liens or threats against a consumer's property is that consumers are unable to purchase mechanics' lien insurance. In essence, in order to remove the lien the homeowner must pay a bill that they have already paid. This situation also makes it difficult for consumers to receive services for any work still under warranty and owed to them by the subcontractor.

Passage of SB 1495 to amend the mechanics' lien law is critical to protect consumers and provide additional security to new homeowners as the housing market continues to recover.

From SB 1495, the actual verbiage for the changes to the bill is as following

“A subcontractor does not have the right to a lien with respect to an improvement to a residential property if: 1) the owner or tenant paid the full contract price to the contractor; and 2) the property is or is intended to be used as the residence of the owner or tenant.”

“A claim filed under this act with respect to an improvement to a residential property subject to section 301(b) shall, upon petition or motion to the court by the owner or a party in interest, be discharged as a lien against the property when: 1) the owner or tenant has paid the full contract price to the contractor; or 2) the lien shall be reduced to the amount of the unpaid contract price owed by the owner or tenant to the contractor.”

The Scott Loper Team includes Scott & Lisa Loper, Keller Williams Real Estate, 601 Bethlehem Pike, Bldg B, Ste 100, Montgomeryville, PA 18936, (215) 631-1900, www.ScottLoperTeam.com.

Lisa Loper October 03, 2012 at 07:02 PM
Steven, I would think the homeowner would need to show proof (i.e. the estimate/contract for the work and cancelled checks/Visa receipts paying for it). I don't think it would be up to a courthouse clerk to make the call. I would think that the subcontractor could still file the lien but the homeowner would be able to get it dismissed if they provided proof of payment in full to the general contractor. Regarding your 2nd question, I think the law is trying to differentiate between commercial and residential property.
HGConservative October 03, 2012 at 07:35 PM
The subcontractor's dispute is with the contractor. The fact that the law would let them put a lien on the house seems absurd to me. It shouldn't even matter if it's a commercial or residential property.
henry eroh October 04, 2012 at 07:22 PM
his dispute might be w/contractor but when you have thousands in material and labor only way to get your money is go back to homeowner as he has the goods and the labor involved- to many sneaky thieving contractor's do this so often- thes subs have families and bills don't you know -instead of penalizeing the subs make a law that goes after these birds that don't pay their men- and you would be surprizede who they are- 2 especially big big guys in the area
jxjipper October 05, 2012 at 03:19 AM
Why not just run a scam and pay the contractor under the table and then have him claim he didn't get paid. Then he sues the homeowner and gets paid again. By the time the system catches up with both of them 5 years later they can change names and reconstitute as some other company.
Family Dental Care Center: Dr. Seth Rosen November 13, 2012 at 03:58 PM
That makes absolutely no sense what so ever.

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