On July 9, 2014, Pennsylvania Governor Tom Corbett signed into law Act 117 of 2014, which amends the Pennsylvania Mechanics’ Lien Law (MLL), 49 P.S. 1101, et seq., to provide that a construction loan secured by an open-end mortgage where at least 60 percent of the proceeds are “intended to pay or used to pay” all or part of the “costs of construction” will have lien priority ahead of any filed mechanics’ lien claims, even when the visible commencement of work was prior to the recordation of the open-end mortgage.
Click here to read the full Alert, written by Duane Morris associate Louise S. Melchor.
The Superior Court of Pennsylvania recently affirmed the dismissal of a contractor’s mechanics’ lien on the grounds that the lien was not filed within 6 months after the completion of the work as required by Pennsylvania’s Lien Law. In Neelu Enterprises, Inc. v. Agarwal, 2012 PA Super. 276, No. 787 MDA 2012 (December 18, 2012), Agarwal, as owner, hired Neelu Enterprises, Inc., a contractor, to build a house. The contractor completed a substantial portion of the work for which it was paid. However, the owner decided to terminate the contractor before the house was completed. The owner and contractor entered into a termination agreement on December 8, 2010. Thereafter, the contractor returned to the job site to correct deficiencies on several occasions through January 7, 2011. The contractor filed its mechanic’s lien on June 23, 2011, within 6 months of January 7, 2011, but more than 6 months from the date of the termination agreement. Pennsylvania’s Lien Law provides that a claimant must file a lien “within six (6) months after completion of his work.” 49 P.S. § 1502(a)(1).
Continue reading Pennsylvania Court Distinguishes Between Corrective Work and Additional Work In Dismissing Mechanics’ Lien Claim