Appellate Clarification of Pennsylvania Mechanics’ Lien Law
In a recent Pennsylvania appellate court decision, the court clarified the Pennsylvania Mechanics’ Lien Law in the context of when groundwork is performed as part of the planned construction, but the building is never built. The filing of a mechanics’ lien on a property for unpaid labor and materials can be a powerful option for a contractor seeking payment for work performed on a project. But what happens when site preparation work takes place, but, construction of the planned building does not? A Pennsylvania appellate court recently answered this question by asking another: what is the nature of the contractor’s work? If the contractor’s work was part of the planned construction of a building, the appellate court reasoned that the property could be lienable — even if the structure in question is never erected.
Background of B.N. Excavating
In B.N. Excavating, Inc. v. PBC Hollow-A, L.P., et. al., a Pennsylvania appellate court considered whether a site contractor who performed excavation and groundwork on a property in connection with a planned two-building project could file a mechanics’ lien on the property. Significantly, construction of the planned buildings did not take place. The site contractor, B.N. Excavating, was never paid for its excavation and groundwork by the contractor and sought to file a mechanics’ lien to recover payment for the work performed.
Because the proposed buildings were never built, the owner of the property argued that a cause of action for a mechanics’ lien was invalid. The owner alleged, among other things, that the contractor’s site and the groundwork were not “incidental to the erection of construction” because the structures did not actually exist. The Pennsylvania Superior Court disagreed and ruled that the site contractor’s lien claim could proceed with litigation notwithstanding the fact that construction of the buildings did not proceed as planned. The Superior Court noted that because the excavation work was performed as an integral part of a construction plan, the activity fell within the realm of Pennsylvania’s Mechanics’ Lien law, even though the planned structures remained un-built.
Impact of B.N. Excavating
Before B.N. Excavating, it was unclear as to whether a successful mechanics’ lien claim could be filed in connection with work performed on a construction site when the planned structure was not actually built. Now, contractors, subcontractors, and suppliers know that their right to a mechanics’ lien is not tied to whether a planned building is ultimately erected, but rather to the nature of the work performed. If the work is an integral part of the building and construction plan, a cause of action for a mechanics’ lien can likely proceed.
Developers and owners looking to protect their property rights should be similarly guided by B.N. Excavating. Now, if work on the site and ground proceeds, but the construction of the actual building structure does not, the Mechanics’ Lien law might still be applicable.
If you have questions about potential exposure to lawsuits in light of the B.N. Excavating case, you should contact your attorney.