Pennsylvania Court Expands Lien Rights For Excavation Work

On behalf of Kaplin Stewart Meloff Reiter & Stein, P.C. posted in on Oct 28, 2016.

Until very recently, contractors performing excavation and site preparation work did not have the right to file a mechanic’s lien in Pennsylvania unless a building or other improvement was actually constructed at the site. That hard and fast rule abruptly changed on May 17, 2013 in a decision by the Pennsylvania Superior Court in B.N. Excavating, Inc. v PBC Hollow-A, L.P., et. al. Based on this decision, contractors now have the right to file mechanic’s liens in Pennsylvania based on excavation and site preparation work performed even if a building or other structure is not ultimately constructed at the site. This is a significant change in the judicial interpretation of the Pennsylvania Mechanic’s Lien Law.

In B.N. Excavating, a site work subcontractor performed excavation, topsoil stripping, concrete pipe, and other subgrading work for a building pad. However, no building or other structure was ever constructed at the site. When no payment was made for this work, the subcontractor nevertheless filed a mechanic’s lien. The lien was dismissed by the trial court which held that because no building was ever constructed, the lien was invalid. The trial court followed existing case precedent which had established that the Pennsylvania Mechanic’s Lien Law would not allow a lien for work unconnected to the construction of an actual building.

However, in the B.N. Excavating opinion, the Superior Court reached a different result. It determined that because the excavation and other site preparation work was performed in connection with planned construction of two buildings, the lien was, on its face, proper. The court’s opinion focused on language in the lien law which provides that property is lienable for excavation which is performed incidental to the erection or construction of an improvement. In essence, the court ruled that excavation and site preparation work is lienable in Pennsylvania if that work contemplates or is connected to the planned construction or erection of a building. In this case, the Claimant’s lien specifically alleged that this was the intent of the subcontractor and general contractor.

What is the import of the B.N. Excavating decision? It clearly expands the range of activities for which a lien may be filed in Pennsylvania. The test or standard by which activities performed in advance of the actual construction of the building will be evaluated appears now to be that if the activity was intended by the contractor performing it to be incidental to or preparatory to the construction of an actual building, a lien will be allowed even if no building is actually constructed. Now, under B.N. Excavating, the actual construction of a building is not necessary to support a lien for pre-construction excavation and site work. Pennsylvania developers seeking to avoid liens for such activity should secure lien waivers, where permitted under the lien statute.