Question

Is A Mechanic’s Lien The Best Remedy For Construction Disputes In Pennsylvania?

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Answer

Mechanic’s liens are a security measure for contractors, subcontractors and suppliers who have not been paid for labor, materials or equipment provided to a project.

However, mechanic’s liens do have some drawbacks. Among them, Pennsylvania’s Contractor and Subcontractor Payment Act provides for the imposition of interest, penalties and even attorney’s fees in some cases for recovering money wrongfully withheld on a commercial project.

Those remedies are not recoverable under a mechanic’s lien, which provides a statutory remedy for recovery of labor and material costs only.

Factors To Consider For Resolving Disputes

Whether a mechanic’s lien claim, a breach of contract case, or a labor and material payment bond claim is the right one depends on many factors, including:

  • What assets the project owner may have
  • Whether a project lien waiver has been filed
  • If there is an enforceable “no lien” clause in a party’s contract or subcontract
  • Which party in the payment chain has failed to satisfy its payment obligation

Indemnity provisions in contracts between the general/prime contractor and the owner or the general/prime contractor and a subcontractor can put a lien claimant at risk for being liable to indemnify an upstream party for damages it incurs from the filing of the lien, such as the owner’s loss of financing.

There are many factors to consider when determining the best strategy to recover payment on a project. Dailey LLP can help you determine the best option based on the particular circumstances of your situation.

Disclaimer: The answer is intended to be for informational purposes only. It should not be relied on as legal advice, nor construed as a form of attorney-client relationship.

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