September 16, 2009
The Pennsylvania legislature has passed Act 34 (Senate Bill 563) which was recently signed into law by Governor Rendell. The amendments to Pennsylvania’s lien statute will go into effect on October 10, 2009.
The changes are significant in that they, once again, allow up-front waivers of lien rights from contractors and subcontractors on “residential properties” even before any work is done or as a condition of the contract. It was in 2007 that the legislature had decided that such advance waivers were unenforceable and against public policy-but allowed certain, limited exceptions for residential projects.
With the 2009 changes, the legislature has “taken a step back” and will allow advance lien waivers on “residential property” which is defined as “property on which there is or will be constructed a residential building not more than three stories in height, not including any basement level regardless of whether any portion of that basement is at grade level, or which is zoned or otherwise approved for residential development on which there is or will be constructed a residential building not more than three stories in height, not including any basement level, regardless of whether any portion of the basement is at grade level, planned residential development or agricultural use, or for which a residential subdivision or land development plan has or planned residential development plan has received preliminary, tentative or final approval on which there is or will be constructed a residential building not more than three stories in height, not including any basement level, regardless of whether any portion of that basement is at grade level, pursuant to the act of July 31, 1969 (P.L. 805, No. 247), known as the “Pennsylvania Municipalities Planning Code.”
The 2009 changes also removed the $1,000,000 limitation on the residential exception. Certainly, these changes could place contractors, subcontractors, sub-subcontractors and material suppliers at greater risk of nonpayment for services rendered on residential property projects by eliminating lien rights.
The changes go into effect on October 10, 2009. The Pennsylvania chapter will be updated prior to the effective date.
Carl G. Roberts, Esquire Contributing Author
Ballard Spahr LLP
Thursday, September 17, 2009
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