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Mechanic's liens

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Letter to the Editor
Saturday, Aug. 2, 2014, 9:00 p.m.

The Pennsylvania Bankers Association applauds the passage of legislation to better balance the interests of construction lenders, contractors, subcontractors and property owners.

Gov. Tom Corbett signed a bill amending the Pennsylvania Mechanic's Lien law, making mechanic's liens subordinate to an open-end mortgage if at least 60 percent of the proceeds of the mortgage is used to pay for construction. Mechanic's liens grant contractors and subcontractors the ability to secure payments for home improvements by gaining a stake in the homeowner's property.

The bill, introduced by Sen. Kim Ward, R-Westmoreland, prevents homeowners from being hit with a lien because a contractor didn't pay his building materials supplier. Now homeowners who pay their contractors won't be liable for unpaid materials.

We thank the governor and Sen. Ward for their efforts to support this legislation. Enacting this bill provides more certainty in construction lending. Economically vital construction projects may proceed now that all parties involved possess a clear understanding of the relationship that a mechanic's lien has to the lien priority of a construction loan.

Duncan Campbell


The writer is the president of the Pennsylvania Bankers Association.

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