Business Workshop: Lien deadline clarified

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A recent Pennsylvania Superior Court decision clarifies when the clock starts ticking on the filing deadline for a mechanic's lien claim.

In Pennsylvania, building contractors have six months after completion of work to file a mechanic's lien, which is an interest in the title to a property for contracting companies that have supplied labor, materials or equipment to improve it.

Contractors file the so-called mechanic's lien when they haven't been paid.

In the case in question, the owner of a piece of property in Cumberland County decided to terminate the contract before the building was completed. After entering into a termination agreement with the property owner, the contractor returned to the job site to correct deficiencies on several occasions. When it wasn't paid for its work, the contractor filed a mechanic's lien within six months of completion of the remedial work.

Unfortunately for the contractor, the Cumberland County Court of Common Pleas dismissed the mechanic's lien, ruling that the six-month period in which to file a lien started on the day the termination agreement had been signed -- and not on the last day the contractor performed remedial work.

By the time the contractor filed its lien, more than six months had passed since the signing of the termination agreement.

On appeal, the Pennsylvania Superior Court affirmed the lower court's decision. The court held that although the contractor had returned to the property after the termination agreement was signed, all of this work was remedial in nature and was performed solely for the purpose of correcting previously deficient work.

This remedial work therefore did not serve to extend the completion date for the purpose of a mechanic's lien.

The lesson for contractors is obvious: Understand when the filing period for a mechanic's lien claim begins and ends.

-- Frank Kosir Jr.
Meyer Unkovic & Scott
fk@muslaw.com

businessnews

Business Workshop is a weekly feature from local experts offering tidbits on matters affecting business. To contribute, contact Business Editor Brian Hyslop at bhyslop@post-gazette.com.


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