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September 22, 2006

New Mechanic's Lien Law

In June, the Governor Rendell signed a new law that becomes in effect on January 1st.  The new law empowers sub-contractors and suppliers with the right to place a lien against a property if the owner or general contractor does not pay the sub-subcontractor for his/her work.  The old law limited this right to the prime contractor and the sub-contractor.


Why did we need a new mechanic’s lien law?
 

The purpose of the law is to protect sub-subcontractors, title insurance companies, and mortgage lenders who finance development projects.  Owners are now motivated to pay a lien regardless of whether they dispute the claim because liens cloud the property title and interfere with the owner’s ability to sell the property after the lien is attached.

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