The Pennsylvania Supreme Court has agreed to hear an appeal in Osprey Portfolio, LLC v. Izett, on the issue of the applicable statute of limitations for a loan guaranty that is signed under seal. In Osprey, the lender argued that a guaranty is an “instrument” which, if signed under seal, is governed by a 20-year statute of limitations pursuant to 42 Pa. C.S. 5529. The guarantor argued that a guaranty is merely a “contract” which is governed by a four-year statute of limitations pursuant to 42 Pa. C.S. 5525.
In Commerce Bank/Harrisburg, N.A. v. Kessler, 2012 WL 1610139 (Pa. Super. 2012), the Superior Court of Pennsylvania recently ruled on two issues of first impression: whether the amended version of the Mechanics Lien Law (“MLL”), 49 P.S. 1101, et seq., applies to contracts entered into prior to its January 1, 2007 effective date, and when a mechanics lien will have priority over an open-end mortgage.
The first issue addressed by the Court in Kessler applies to a limited number of loans- those for which contracts were entered into and visible commencement of work occurred prior to the January 1, 2007 effective date of the amended MLL, but the lien obtained after January 1, 2007. On this issue, the Court held that the applicable law was the amended MLL, since it was the law in effect at the time the contractors’ lien was filed; the law in place when construction began and the contract was entered into was not applied.