Tag Archives: pennsylvania

Pennsylvania Mechanics’ Lien Law Amended, Clarifying Open-End Construction Loan Mortgage Priority

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.

Bill that Includes Major Revisions to Pennsylvania’s Mechanic’s Lien Law Passes House and Moves to Senate

Prior to 2007, the Pennsylvania Mechanic’s Lien Law of 1963, 49 P.S. §1101-§1902 (the “Mechanic’s Lien Law”) operated for over 40 years in its original form, without any significant or substantive modifications. In 2007, however, amendments to the Mechanic’s Lien Law went into effect that significantly changed the statute. For example, the 2007 amendments changed, inter alia, the enforceability of upfront waivers and the definition of a “subcontractor.” In 2009, additional amendments to the Mechanic’s Lien Law went into effect which changed some of the 2007 amendments.

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Pennsylvania State Court Enforces Pay-If-Paid Clause

Last summer, the United States Court of Appeals for the Third Circuit issued a precedential opinion in Sloan Co. v. Liberty Mutual Ins. Co., 653 F.3d 175 (3d Cir. 2011), that had broad implications for the construction community, because it affirmed an important industry-standard practice. More specifically, the Third Circuit held that a “pay-if-paid” provision in a subcontract, which provided that the general contractor’s receipt of full payment from the owner is an express condition precedent to the subcontractor’s right to full payment from the general contractor, was valid and enforceable by the general contractor and/or its payment bond surety.

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The Pennsylvania Commonwealth Court Approves Liquidation of First Sealord Surety Insurance, and Bonds Issued By This Surety Will Terminate Within 30 Days

On February 8, 2012, the Pennsylvania Insurance Department (the “Department”) announced that the Pennsylvania Commonwealth Court approved its petition to liquidate First Sealord Surety Insurance.

According to the Department’s Commissioner, Michael Consedine, the Department petitioned the Commonwealth Court for a liquidation order because “First Sealord Surety is no longer able to meet its policyholder obligations or pay its debts as they come due.”

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Pennsylvania Does Not Adopt the 2012 International Code Council’s Model Construction Codes

On January 18, 2012, the Pennsylvania Uniform Construction Code Review and Advisory Council (the Council) voted 11 to 5 against the adoption of the 2012 I-Codes, the model building codes published by the International Code Council (ICC). The Council, however, did make an exception regarding the accessibility portion of the 2012 model code. Based on this vote, the Council is now charged with submitting a report to the Secretary of Labor and Industry by July 2012, and the bulk of the 2009 edition of the ICC’s codes will remain the basis for Pennsylvania’s uniform construction code.

Because the 2012 I-Codes were not adopted, the ICC’s new “green building” model code, called the International Green Construction Code will not be included in Pennsylvania’s construction code.

Many of Pennsylvania’s construction trade organizations celebrated the Council’s decision, because they believe the implementation of new codes would add additional costs that the construction industry cannot afford. Similarly, the Council voted against the 2011-I Codes, because, inter alia, the new codes were complicated and impossible to enforce.