Waiver of Mechanics' Liens in Pennsylvania
Subject to new amendments which prohibit the waiver of mechanics’ liens in certain circumstances, mechanics' lien waivers generally occur in one of two main ways: first, as a contractual term within a parties’ contract; or second, as a separate Waiver signed by a contractor or subcontractor (which can also be contained within the original contract signed by the general contractor with the owner). A separate Waiver is cross-indexed by the Prothonotary in the name of the general contractor and the owner. The property owner bears the risk of mis-indexing and should check to make sure the waiver has been properly indexed by the Prothonotary before work begins on the property.
Subject to the 2007 and 2009 amendments to the Pennsylvania Mechanics' Lien Law, if the general contractor waives all liens and records such waiver in the Prothonotary’s Office of the county where the project is located, it will have the effect of waiving all tangential lien rights as well. A docket search is therefore wise before a subcontractor signs any contract. There are, however, unusual and infrequent situations in which a centrally-filed waiver will not bar a subcontractor’s lien claim. While these varied situations are too complex to review here, there are two general principles that warrant further scrutiny:
- If the general contractor and owner are, in essence, the same person, then a centrally-filed Waiver may not be legally operative; and
- If there is truly no general contractor, all trades are “prime" contractors who contract directly with the owner. Even if one prime is identified a “general contractor," if your contract is not derived from this general contractor, you are not bound by a Waiver executed by such general contractor.