Wednesday, June 3, 2015

Modular Manufacturers, Builders and Suppliers Should Never "NOT GET PAID"

Written by Steven Snyder, Attorney specializing in Modular Construction

If you are a Modular Manufacture, Modular Builder or Dealer, Material Supplier or for that matter a conventional Building Contractor, Sub-Contractor, Remodeler or any company involved in performing work or providing building materials for construction on real property, you should “never not get paid.” But it is very important that you do not wait to file. If you miss a deadline, you will not be able to file a mechanics lien, and may lose your opportunity to have a judgment placed on the property. And the judgement is what gets you paid!

Every state has a Mechanics Lien Law and most of the state laws are similar in nature…and Attorney Snyder can help you in any state where you have a problem getting paid.

For illustration purposes…
Under Pennsylvania’s Mechanic’s Liens Law, (49 P.S. § 1101 et. seq.) contractors, as well as subcontractors and materialmen (building supply companies) who have a direct contractual relationship with the general contractor may file a mechanic’s liens for unpaid work relating to the “erection, construction, alteration or repair of improvements located on real estate, including the provision of materials, fixtures and equipment used therein.” This is not only an issue in connection with major construction jobs; any repair work can result in a lien if not paid on time. An architect or engineer may also file a lien if that design professional, “in addition to the preparation of drawings, specifications and contract documents also superintends or supervises any such erection, construction, alteration or repair” on the property.

Deadline to file in Pennsylvania – The mechanic’s lien is filed in the prothonotary’s office of the Court of Common Pleas in the county in which the property where the construction work was performed is located. All contractors, subcontractors and sub-subcontractors (referred to as the “claimant”) must first serve a Formal Notice of their intention to file a lien on the owner at least 30 days before filing lien claim. The claimant must then file a Lien Claim in the prothonotary’s office within six months of the date of the last work which was performed on the project, and must serve notice of the lien claim on the owner within one month after that. An affidavit of service then must be filed with the court within twenty days after service of the written notice on the owner. After filing the claim and having the Lien recorded, the claimants must enforce by filing a lawsuit within two years of Lien Claim filing.

As a result of these deadlines, a potential claimant cannot wait six months to file, because you must first file the 30 day notice and will then have five months or less from the last day of work on the project to file the mechanics lien claim. And the courts will not cut you any slack, so DO NOT WAIT TO FILE.

Waiver of Mechanics Liens – Unlike many states, Pennsylvania mechanic’s lien law allows a general contractor to waive a subcontractor’s right to a mechanic’s lien in certain circumstances. A subcontractor can waive its right to lien on a residential construction project where the contract between the owner and the general contractor is less than one million dollars. A subcontractor can also waive its right to file a lien on all projects only if the general contractor provides a bond guaranteeing payment to subcontractors.
In addition to the Pennsylvania’s Mechanic’s Lien Law, Pennsylvania also has a Contractor and Subcontractor Payment Act, (73 P.S. § 501 et seq.) pertaining to commercial and multi-family construction contracts which establishes timelines for progress and final payments (if the contract doesn’t have one), and includes interest, penalties and attorney fees for failing to make payments on time.

If a Modular Manufacture, Builder, Dealer or Supplier unsuccessful in having a mechanics lien placed on the property can still file suit and get a judgment against the owner of the project, but it will take longer and be more costly. And with judgments against real property, generally, priority goes to the first lien over subsequent liens, so you want to get your lien entered as soon as possible.

As mentioned, the requirements, in all states, involved in properly drafting, filing, providing notice to the property owner, and in service of the lien are very specific, and if not adhered to, the mechanics lien will not be enforceable. If you have a project where you have not been paid, you should call Steve Snyder immediately to discuss your options. If you are in the construction business and would like to discuss other areas of your business, call Steve today to set up an appointment.

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