The Pennsylvania Department of General Services is Scheduled to Unveil Pennsylvania’s Brand New State Construction Notices Directory Website by December 31, 2016.
December 14, 2016
This directory will serve as a statewide public searchable database of various construction notices for projects exceeding $1.5 million, primarily indexed by county. Such projects will be referred to as “searchable projects.” Please keep the following in mind as you review the changes below:
- The new rules apply to all projects exceeding $1.5 million commenced after the date the directory becomes operational.
- Generally, project owners are not required to file a Notice of Commencement, although they may decide it’s beneficial to file.
- Financing agreements may require owners to file a Notice of Commencement. Please review all loan documentation thoroughly to avoid default.
- While project owners assume additional notice responsibilities by filing a Notice of Commencement, they also benefit from filing a Notice of Commencement by limiting potential lien claimants to those subcontractors and material suppliers that file Notices of Furnishing.
- Owners and Contractors must ensure that all contracts on searchable projects where a Notice of Commencement has been files include the magic notice language below.
- Subcontractors and material suppliers must file a Notice of Furnishing within 45 days of first commencing work or delivering materials to the project to preserve their Mechanic’s Lien rights.
- The State Construction Notices Directory provides project transparency to all participants in the project to the extent that participants file the appropriate paperwork. This database may present red flags earlier in the project that alert other participants of serious issues and prevent further losses.
Notice of Commencement: For a fee that has yet to be established or publicized, any project owner may file a Notice of Commencement prior to commencement of labor, work or the furnishing of materials. Such notice must include: (i) the contractor’s full name, address and e-mail; (ii) project’s full name and location; (iii) the county in which the project is located; (iv) the legal description of the property, including tax identification number of each parcel; (v) owner’s full name, address and e-mail address; (vi) If applicable, the surety’s full name, address and e-mail address for the performance and payment bonds and the bond numbers; (vii) the unique identifying number that is assigned to the Notice of Commencement. In addition, a copy of the Notice of Commencement must be conspicuously posted at the project before work begins and remain posted thereafter (with 48 hours to replace upon written notice that the posting has been removed). The Notice of Commencement must be made an integral part of the Contract Documents that are provided to all subcontractors and the following language must appear in all contracts and subcontracts for the project:
“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.”
Notice of Furnishing: If a Notice of Commencement has been filed for a searchable project, then in order to preserve its mechanic lien rights, any subcontractor or material supplier (including both first and second tier) must file a Notice of Furnishing with 45 days after first performing work or services at the job site or first providing materials to the job site. Such notice must include: (i) a general description of the labor or materials furnished; (ii) the subcontractor/material supplier’s full name and address; the full name and address of the person/entity that contracted for the services or items; and (iv) a description of the project sufficient to identify it based on the description in the Notice of Commencement.
Notice of Completion: The project owner may file a Notice of Completion within 45 days of the issuance of the occupancy permit or cessation of work for 30 consecutive days, provided that work is not resumed under the same contract. This is for informational purposes only.
Notice of Nonpayment: Subcontractors who have not received full payment for their work, or for goods or services, may file a Notice of Nonpayment for informational purposes only. Failure to file a notice of nonpayment will not affect lien rights and filing of the notice of nonpayment shall not fulfill written notice requirement under the Mechanic’s Lien Law.
Prohibitions: It constitutes a second degree misdemeanor to suggest, request, encourage or require that a subcontractor not file a Notice of Furnishing as a condition of entering into, continuing, receiving or maintaining a contract for work or furnishing of materials on a searchable project. Furthermore, the new law provides a cause of action against any party that files a notice in the directory without a good faith reason, with the intent to exact more payment than due, or to obtain an unjustified advantage or benefit. Liability for such abuse is the greater of actual damages or $2000.
This Construction Alert is intended to keep readers current on matters affecting the construction industry, and is not intended to be legal advice. If you have any questions, please contact any of our attorneys in the Construction Group.
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