Mechanics’ Lien Waiver Filing Requirements Loosened

Act 96, effective December 2004, loosens the filing requirements of Mechanics’ Lien Waivers, also known as No-Lien Agreements.  These agreements, if properly completed, waive a contractors’ statutory right to file a lien against real property in the event of nonpayment for the improvements made.

In order for a no-lien agreement to be binding on a lower tier subcontractor or material supplier, actual proof that the notice was presented to that entity prior to labor and material being furnished is necessary. One method of proving presentation is to file the no-lien agreement with the prothonotary of the county where the property is located.

Prior to Act 96, to be effective, the filing needed to be indexed in the name of the contractor as defendant and the owner as plaintiff AND ALSO in the name of the contractor as plaintiff and the owner as defendant. The responsibility of assuring that the no-lien was properly indexed rested on the filing party.

This “double work” greatly increases the potential for misfiling and invalidating the no-lien protections.

Act 96 relies on computers to eliminate the dual indexing in one situation: If the prothonotary office’s system electronically indexes agreements in a way that they can be retrieved regardless of whether the party is plaintiff or defendant.

Of course, to ensure that a no-lien agreement is properly filed, one still needs to verify whether the prothonotary can in fact allow for an electronic search for an entity regardless of its party status on the document indexed.  Failing to do so could run the risk of the filing not operating as valid notice of the project’s no-lien status.

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