Difference between revisions of "Real Estate Broker Liens in Pennsylvania"
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At least 3 days before recording a notice of lien, the broker must give written notice to both the owner and prospective buyer of their intention to claim a lien by registered or certified mail.<ref>68 P.S. 1056(f)</ref><br> | At least 3 days before recording a notice of lien, the broker must give written notice to both the owner and prospective buyer of their intention to claim a lien by registered or certified mail.<ref>68 P.S. 1056(f)</ref><br> | ||
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| − | If the sale does not occur due to no fault of the owner, a recorded lien shall be satisfied of record by the broker.<ref>68 P.S. § 1056(h)</ref> | + | If the sale does not occur due to no fault of the owner, a recorded lien shall be satisfied of record by the broker.<ref>68 P.S. § 1056(h)</ref><br> |
| + | <br> | ||
| + | Waiver of the right to lien in advance is not allowed.<ref>68 P.S. § 1061</ref> | ||
=Remedies and Solutions= | =Remedies and Solutions= | ||
Revision as of 13:23, 2 January 2026
Citation
Commercial Real Estate Broker Lien Act, 68 P.S. §§ 1051-1064
Overview
Brokers, unless employed by another broker, have a lien in the amount of their agreed-upon compensation on commercial real estate or any interest in that commercial real estate when the listing broker has provided services and obtained a willing purchaser, or is entitled to compensation under a written agreement while representing the buyer.[1] However, the statute requires recording of notices of the lien before it attaches to the real estate.
Underwriting
When the broker represents the seller, the lien arises when the prospective buyer is procured, or when they are otherwise entitled to compensation under the written agreement, AND when a notice of lien is recorded in the office of the prothonotary of the county where the real estate is located - PRIOR to the actual conveyance or transfer of the commercial real estate.[2] Therefore, any recorded notices of lien prior to the conveyance must be paid and satisfied. If the notice is not recorded prior to the conveyance deed, then the lien is lost.[3]
When the broker represents the buyer, they have until 90 days after the conveyance to record the lien.[4] However, any lien would be an act of the Insured Owner, post-policy, or otherwise excluded from coverage.
The priority of the broker's lien is expressly subject to all mortgages, regardless of the date record.[5] Therefore, satisfaction of any lien claims should not be necessary when insuring purchase-money or refinance mortgages.
General Principles
"Commercial real estate" is defined as ALL real estate, other than: real estate containing 1-4 residential units, real estate zoned for agricultural purposes and not subject to an agreement of sale contingent upon rezoning for nonagricultural purposes.[6] The term also does not include single-family units such as condominiums, townhouses or homes in a subdivision conveyed on a unit-by-unit basis even, though these units may be part of a larger building or parcel of real estate containing more than four residential units.[7]
The lien is only in favor of the broker, even if another person furnishes labor or materials which result in procurement of the buyer.[8]
If the real estate is located in more than one county, a filed lien is only effective against the part of the real estate in that county.[9]
At least 3 days before recording a notice of lien, the broker must give written notice to both the owner and prospective buyer of their intention to claim a lien by registered or certified mail.[10]
If the sale does not occur due to no fault of the owner, a recorded lien shall be satisfied of record by the broker.[11]
Waiver of the right to lien in advance is not allowed.[12]
Remedies and Solutions
If a broker refuses to satisfy a lien, the owner may demand the filing of a Complaint or commence an action against the broker seeking satisfaction or striking of the lien.[13] If the Court finds the lien was filed in bad faith or the refusal to satisfy was made in bad faith, the Court shall award the owner reasonable expenses including attorneys fees.[14]
An owner may file a praecipe to cause the broker to file their complaint within 20 days of service or risk extinguishment of the lien.[15]
If the broker fails to commence proceedings to enforce the lien within two years after recording the lien, the lien shall be extinguished.[16] If the lien is based on an option to purchase, the broker has 6 months from conveyance to commence proceedings.[17]
If the filing of a lien would prevent a transaction from closing, an escrow shall be established and the broker must provide a release of lien, unless the parties (including the broker) can agree on an alternative resolution.[18] The owner can also apply to the Court for a discharge by depositing funds with the Court.[19] The Court can also approve alternate security in lieu of cash in double the amount required.[20]
- ↑ 68 P.S. § 1053
- ↑ 68 P.S. § 1056(a)
- ↑ 68 P.S. § 1056(g)
- ↑ 68 P.S. § 1056(c)
- ↑ 68 P.S. § 1059
- ↑ 68 P.S. § 1052
- ↑ 68 P.S. § 1052
- ↑ 68 P.S. § 1055
- ↑ 68 P.S. § 1056(d)
- ↑ 68 P.S. 1056(f)
- ↑ 68 P.S. § 1056(h)
- ↑ 68 P.S. § 1061
- ↑ 68 P.S. § 1056(h)
- ↑ 68 P.S. § 1056(h)
- ↑ 68 P.S. § 1058(f)
- ↑ 68 P.S. § 1058(c)
- ↑ 68 P.S. § 1058(d)
- ↑ 68 P.S. § 1060
- ↑ 68 P.S. § 1061
- ↑ 68 P.S. § 1061
