Deconstructing Mechanic’s Liens
Abstract: In this paper, we examine a new data set composed of mechanic’s lien complaints filed in the First Judicial District of Pennsylvania (Philadelphia County). Over a 10-year period, 426 mechanic’s liens were filed against 398 single-family properties, which is less than 0.1 percent of single-family properties in Philadelphia. The lien properties in our data set tend to be more expensive, newer, and larger than non-lien properties. About 80 percent of mechanic’s liens are filed by general contractors, with the remainder pursued by a subcontractor. Notably, a 2014 change in Pennsylvania law made it less advantageous for subcontractors to file liens, and we find a concomitant decline in the share of liens filed by subcontractors. We conclude by discussing how homeowners can protect themselves from mechanic’s lien filings, including a requirement that the general contractor sign a written release of the lien at the time a payment is made.
Provider: Federal Reserve Bank of Philadelphia
Part of Series: Consumer Finance Institute discussion papers
Publication Date: 2020-08-01
Number: DP 20-04