Back to the Basics: A Fundamental Approach to the PA Construction Notices Directory
It has been just over three years since Pennsylvania amended its Mechanics’ Lien Law and launched its Construction Notices Directory (the Directory), a standardized statewide system used to access, register, and file construction notices on searchable projects. The intention of the Directory is to provide greater protections to the lien rights of owners, contractors, and subcontractors alike. However, in exchange for these protections, Pennsylvania implemented additional, and decidedly high-risk, filing requirements where a party’s failure to comply can result in the forfeiture of its lien rights for the project.
While most within the industry are aware of the Directory, we are offering a quick refresher to bring you back to the basics and reeducate you on each party’s fundamental responsibilities under the new law. Consider it a Cohen Seglias Directory Cheat Sheet.
What Is a Searchable Project?
At the onset of a project, the first question to ask is whether the project is a “searchable project.” According to the statute, a searchable project consists of the erection and construction, or alteration or repair, of an improvement costing a minimum of $1,500,000. Within this context, “erection and construction” refers to a new improvement, a substantial addition to an existing improvement, or any adaptation of an existing improvement for a new or distinct use and effecting a material change in the interior or exterior.
If the project falls within these parameters, it is deemed to be a searchable project and thus eligible to be registered with the Directory.
Who Is Responsible for Registering a Searchable Project?
Before the commencement of labor, work, or the furnishing of materials for a searchable project, either the owner or an agent of the owner may register the project by filing a Notice of Commencement with the Directory. A contractor may (and often will) act as agent for the owner and file the Notice of Commencement for the Project. However, the contractor must be specifically authorized by the contract to do so, and the owner must assume responsibility for the contractor’s actions.
The Notice of Commencement must include the following information:
- Full name, address, and email address of the contractor
- Full name and location of the project
- County in which the project is located
- Legal description of the property upon which the improvements are being made, including the tax identification number of each parcel included in the project
- Full name, address, and email address of the project owner of record
- Full name, address, and email address of a surety for the performance and payment bonds and the bond numbers (if applicable)
- Unique identifying number that is assigned to the Notice of Commencement
If the owner or contractor fails to file the Notice of Commencement, the project will not be registered with the Directory, and the parties will lose the extra protections created by the statute’s amendments.
What Are an Owner/Contractor’s Responsibilities After the Notice of Commencement Is Filed?
Once the Notice of Commencement has been filed and before physical work commences on the project, the project owner is responsible for posting the Notice of Commencement in a visible location at the project site and making sure that it remains posted until the completion of the project. Both the owner and the contractor must also make reasonable efforts to ensure that the Notice of Commencement is incorporated into the contract documents of all subcontractors awarded work on the project.
All subcontracts for a searchable project must also include the following written notice notifying the subcontractor that failure to file a Notice of Furnishing will result in the loss of lien rights:
A subcontractor that fails to file a Notice of Furnishing on the Department of General Services publicly accessible Internet website as required by the act of August 24, 1963 (P.L. 1175, No. 497), known as the Mechanics’ Lien Law of 1963, may forfeit the right to file a mechanics lien. It is unlawful for a searchable project owner, searchable project owner’s agent, contractor or subcontractor to request, suggest, encourage or require that a subcontractor not file the required notice as required by the Mechanics’ Lien Law of 1963.
What Are Subcontractor’s Responsibilities When Working on a Searchable Project?
A subcontractor that performs works or services, or provides materials in furtherance of a project for which a Notice of Commencement has been filed, must file a Notice of Furnishing with the Directory. The Notice of Furnishing must be filed within 45 days after the subcontractor first performs work or services, or provides materials to the job site. Failure to do so will result in the complete forfeiture of the subcontractor’s lien rights for the project.
The Notice of Furnishing must include the following information:
- General description of the labor or materials furnished
- Full name and address of the person supplying the services
- Full name and address of the person that contracted for the services or items being supplied
- Description that sufficiently identifies the searchable project, based on the description in the Notice of Commencement.
Furthermore, the Notice of Furnishing must be substantially in the following form:
The implementation of the Pennsylvania Construction Notices Directory impacts all those that work in the construction industry. In following these requirements, owners, contractors, and subcontractors are afforded greater protections under the Mechanics’ Lien Law. However, failure to do so can result in the absolute forfeiture of a party’s lien rights on a project. Our advice? Take this cheat sheet, and, depending on your role, allow it to guide you in incorporating the necessary steps into your routine at the commencement of a searchable project. If you have any further questions regarding the Directory or how it relates to your construction business, feel free to contact us for assistance.