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What is a mechanic's lien?

Many small business owners and homeowners in Philadelphia have had the nightmarish experience of receiving a written notice that a mechanic's lien has been filed against their property and may be sold if the lien is not satisfied. Occasionally, property owners will receive more than one such notice with respect to the same project. The recipients of such notices may then ask two questions: 1. What is a mechanic's lien? And 2. What do I do about it?

Pennsylvania real estate law gives every contractor and subcontractor the right to file a lien for the amount of "labor or materials furnished in the erection or construction, or the alteration or repair of the improvement." The statute is intended to protect contractors and subcontractors from owners who hire them but do not pay for the work that was performed. Because of its breadth, it generates a great deal of real estate litigation.

If the underlying debt, i.e., the amount owed by the owner to the contractor is paid, the lien is extinguished. If the underlying debt is not paid, the contractor can bring a court action to force the sale of the property to recover the amounts owed.

The mechanic's lien statute is very complex. It imposes a number of requirements on the lien holder, and the failure to meet any of these requirements can invalidate the lien. The complexity of the statute mandates that both lien claimants and property owners seek competent legal advice from attorneys who are experienced in dealing with the mechanic's lien process and lawsuits to foreclose them.

Source: Pennsylvania Mechanics Lien Law, "Pennsylvania's Mechanics Lien Statute," accessed on Feb. 9, 2015

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