Construction Law | Residential | Commercial | Home Improvement | Contractor Sub Payment Act | Mechanic’s Liens

Commercial Projects - sm

Payment to the Contractor

What if the owner has paid the contractor, but the sub takes a lien?  The properly owner does not have an automatic “defense  of payment” against mechanic’s liens in Pennsylvania.  However, the owner can protect himself from paying for  the project twice by moving that the court accept a copy  of the general contract before any work is performed on  the project. This will constrain each subcontractor to a  pro-rata share of money still owed the general  contractor. There are also challenges that can be made to  the manner of filing and how notice was served.

The property owner can seek lien waivers from the  general contractor, sub and suppliers. For residential  jobs involving less than $1,000,000, the general  contractor can waive its own rights plus the rights of all  subs and suppliers.

Further, for commercial jobs that exceed $1,000,000 in  value, the sub can waive his lien by conduct or act. Based  on how the law is written, it is theoretically possible for a  sub to waive his lien by silence, by, for example, failing to  respond to a letter from a contractor that provides,  “failure to endorse and return this lien waive shall  amount to a waiver of your lien right.” The appellate  courts have yet to address this situation and thus the  contractors, subs, and property owners should be aware  of this issue.

Challenging the Lien  in Court
One effective defense is challenging the lien in court  based on a technical defect or based on a lien waiver. Or,  if the work at issue was defective, the owner can rule on  the contractor or sub to file a complaint in support of the  lien. If the lien was not done correctly, the lien will not  stand ultimately, or the amount of the lien may be  reduced.

A property owner can seek an offset of the lien amount  by showing the court that the contractor or sub cause  some other harm or breach, but the owner cannot get an  independent money award against the contractor or sub,  at least not through a mechanic’s lien. Rather, for the  owner to get a money award against the sub or  contractor, he needs to file his own separate action.

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