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COMMERCIAL REAL ESTATE BROKER LIEN ACT

Cl. 68Act of Mar. 20, 1998, P.L. 197, No. 34

AN ACT

Providing for real estate broker liens in the amount of

compensation due for services rendered by the broker in

connection with certain real estate transactions.

TABLE OF CONTENTS

Section 1. Short title.

Section 2. Definitions.

Section 3. Right to lien.

Section 4. Excessive curtilage.

Section 5. Lien not allowed in certain cases.

Section 6. Attachment of lien.

Section 7. Notice of lien.

Section 8. Enforcement of lien.

Section 9. Priority.

Section 10. Escrow of disputed amounts.

Section 11. Waiver prohibited.

Section 12. Revival of judgment.

Section 13. Severability.

Section 14. Effective date.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Short title.

This act shall be known and may be cited as the Commercial

Real Estate Broker Lien Act.

Section 2. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Broker." A person who is licensed under the laws of this

Commonwealth to act as a real estate broker.

"Commercial real estate." Any real estate other than:

(1) Real estate containing one to four residential

units.

(2) Real estate that is zoned for agricultural purposes

and that is not subject to an agreement of sale contingent

upon the rezoning of all or any portion of the real estate

to provide for nonagricultural uses.

The term does not include single-family residential units or

building lots such as condominiums, townhouses or homes in a

subdivision when sold, leased or otherwise 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.

Section 3. Right to lien.

Each broker, unless employed by another broker, shall have

a lien in the amount of the compensation agreed upon by and

between the broker and the broker's client upon commercial real

estate or any interest in that commercial real estate:

(1) listed with the broker under the terms of a written

agreement for the purposes of selling, leasing or otherwise

conveying any interest in the commercial real estate that

is signed by the owner or the owner's agent and as to which

the broker or broker's employees or independent contractors

have provided licensed services that result during the term

of the written agreement in the procurement of a person or

entity that is ready, willing and able to purchase, lease

or otherwise accept a conveyance of the commercial real

estate or any interest in the commercial real estate upon

terms that are provided in a written agreement that is signed

by the owner or the owner's agent or which are otherwise

acceptable to the owner or the owner's agent as evidenced

by a written agreement that is signed by the owner or the

owner's agent; or

(2) when a broker, pursuant to a written agreement with

a prospective buyer to represent the buyer as to the purchase

or other conveyance to the buyer of commercial real estate,

becomes entitled to compensation. In the case of a tenant

represented by a broker or other representative where the

fee or commission is to be paid by the current owner, the

right to file a lien shall be conditioned upon the owner

agreeing in writing to pay the fee or commission of the

broker or other representative of the tenant.

Section 4. Excessive curtilage.

Where a party objects that a lien has been claimed against

more commercial real estate than should justly be included

therein, the court upon petition may, after hearing by

deposition or otherwise, limit the boundaries of commercial

real estate subject to the lien. Failure to raise this objection

shall not be a waiver of the right to plead the same as a

defense thereafter.

Section 5. Lien not allowed in certain cases.

No lien shall be allowed in favor of any person other than

a broker as defined herein even though such person furnishes

labor or materials which result in the procurement of a person

or entity who is ready, willing and able to purchase, lease or

accept a conveyance of the commercial real estate or any

interest in the commercial real estate.

Section 6. Attachment of lien.

(a) Time and manner of attachment.--A lien under section 3

shall attach to the commercial real estate or any interest in

the commercial real estate upon:

(1) the broker procuring a person or entity that is

ready, willing and able to purchase, lease or otherwise

accept a conveyance of the commercial real estate upon the

terms set forth in the written agreement with the owner or

that is otherwise acceptable to the owner or the owner's

agent or the broker being otherwise entitled to a fee or

commission under a written agreement that is signed by the

owner or the owner's agent; and

(2) except as provided in subsection (b), (c) or (d),

the broker recording a notice of lien in the office of the

prothonotary in the county in which the real property or any

interest in the real property is located prior to the actual

conveyance or transfer of the commercial real estate against

which the broker is claiming a lien.

(b) Leases.--In the case of a lease, the notice of lien

shall be recorded within 90 days of a default by the owner or

successors in interest under the terms of the compensation

agreement.

with a prospective buyer as provided in section 3(2), the lien

shall attach upon the recording of a notice of lien by the

broker in the office of the prothonotary of the county in which

the real property or any interest in the real property is

located within 90 days after the purchase or other conveyance

or transfer to the buyer.

(d) Commercial real estate in more than one county.--Where

the commercial real estate is located in more than one county,

the lien may be filed in any one or more of the said counties

but shall be effective only as to the part of the commercial

real estate in the county in which it has been filed.

(e) Owner notification.--The broker shall mail a copy of

the notice of lien to the owner of the commercial real estate

by certified mail.

(f) Recording.--A broker shall not be entitled to record a

notice of or claim for lien unless, not later than three days

prior to the date of conveyance, he gives written notice of the

claim for lien to the owner and the prospective buyer that he

is entitled to compensation under the terms set forth in the

written contract and intends to claim a lien on the commercial

real property. The notice shall be served upon the owner and

prospective buyer by registered or certified mail. When there

are two or more owners or two or more prospective buyers, the

notice shall be served upon each owner and each prospective

buyer. The notice shall include a statement of the buyer's right

to deposit funds in escrow under section 10.

(g) Lien unenforceable.--The broker's lien shall be void

and unenforceable if recording does not occur at the time and

in the manner required by this section.

(h) Satisfaction of the lien.--In the event a lien is

recorded upon the procurement of a person or entity that is

ready, willing and able to purchase, lease or otherwise accept

a conveyance of commercial property and the conveyance fails

to occur through no fault or condition of the owner, the lien

recorded by the broker pursuant to this section shall be

satisfied of record by the broker, whereupon the property shall

be freed and discharged from such lien. If the broker does not

voluntarily satisfy the lien, the owner may demand the filing

of a complaint pursuant to section 8(f) or commence an action

against the broker seeking as relief the satisfaction or

striking of the lien. Upon finding that the lien was recorded

in bad faith or the refusal to satisfy the lien was in bad

faith, a court shall award the owner the amount of the

reasonable expenses, including attorney fees and court costs,

incurred by the owner as a result of the recording of the lien

or refusal to satisfy the lien.

Section 7. Notice of lien.

The notice of lien shall state the name of the claimant, the

name of the owner, a description of the property upon which the

lien is being claimed, the amount for which the lien is claimed

and the real estate license number of the broker and shall be

signed and verified by the broker or by a person who is

authorized to sign on behalf of the broker and shall be

verified.

Section 8. Enforcement of lien.

(a) Commencement of proceedings.--A broker may bring suit

to enforce the lien in the court of common pleas in the county

where the lien is filed by filing a complaint as set forth under

subsection (e).

(b) Commercial real estate in more than one county.--Where

a claim has been filed in more than one county as provided by

section 6(d), proceedings to obtain judgment upon all the claims

may be commenced in any of the counties, and the judgment shall

be res adjudicata as to the merits of the claims properly filed

in other counties. The judgment may be transferred to such other

county by filing of record a certified copy of the docket

entries in the action and a certification of the judgment and

amount, if any. The prothonotary of the court to which the

judgment has been transferred shall forthwith index it upon the

judgment index.

except as set forth under subsection (d), within two years after

recording the lien, commence proceedings to enforce the lien.

Failure to commence proceedings within two years after recording

the lien shall extinguish the lien.

(d) Lien based on option to purchase.--A broker claiming a

lien based upon an option to purchase shall, within six months

after the transfer or conveyance of the commercial real estate

pursuant to the exercise of the option to purchase, commence

proceedings to enforce the lien. Failure to commence proceedings

within this time shall extinguish the lien.

(e) Complaint and defendants to the action.--A complaint

under this section shall contain a brief statement of the

contract or agreement on which the lien is founded, the date

when the contract or agreement was made, a description of the

services performed, the amount due and unpaid and a description

of the property that is subject to the lien. The plaintiff shall

make all interested parties, of whose interest he is notified

or has knowledge, defendants to the action. The practice and

procedure shall be governed by the Pennsylvania Rules of Civil

Procedure and all other rules and procedures relating to civil

actions except to the extent inconsistent with the provisions

of this section.

(f) Praecipe of the owner.--The prothonotary, upon praecipe

of the owner, shall enter a rule upon the person claiming the

lien to file a complaint. If a complaint is not filed within

20 days after service of the rule, upon praecipe of the owner

of the property the lien shall be extinguished.

(g) Satisfaction or release.--Whenever a claim for lien

which has been filed with the prothonotary is paid, the claimant

shall mark the docket satisfied within 30 days of receipt of

payment.

(h) Costs.--The cost of proceedings, including reasonable

attorney fees and prejudgment interest due to the prevailing

party, shall be borne by the nonprevailing party or parties.

If more than one party is responsible for the costs, fees and

prejudgment interest, the costs, fees and prejudgment interest

shall be equitably apportioned by the court among the

responsible parties.

Section 9. Priority.

The priority of a broker's lien shall be as set forth under

42 Pa.C.S. § 8141 (relating to time from which liens have

priority), except that mortgages, mechanics liens and defeasible

deeds in the nature of a mortgage shall have priority over a

broker's lien, regardless of the date recorded.

Section 10. Escrow of disputed amounts.

Except as otherwise provided in this section, whenever a

claim for lien has been filed with the prothonotary that would

prevent the closing of a transaction or conveyance, an escrow

account shall be established from the proceeds from the

transaction or conveyance in an amount that is sufficient to

release the claim for lien. The requirement to establish an

escrow account shall not be cause for any party to refuse to

close the transaction. These moneys shall be held in escrow

until the parties' rights to the escrowed moneys have been

determined by written agreement of the parties, a court of law

or other process as may be agreed to by the parties. Upon funds

in the amount of the claimed lien being escrowed, a release of

the claim for lien shall be provided by the broker who is

claiming the lien. The parties are not required to follow this

escrow procedure if alternative procedures which would allow

the transaction to close are available and are acceptable to

the broker in the transaction.

Section 11. Waiver prohibited.

(a) General rule.--Except as provided in subsection (b),

an agreement to waive the right to a lien under this act made

contemporaneously with the signing of the listing agreement,

whether dated on the date of the listing agreement or

thereafter, shall be void and unenforceable.

(b) Discharge of lien.--Any lien filed hereunder shall,

upon petition of the party subject to the broker's lien or any

party in interest, be discharged as a lien against the

commercial real estate whenever a sum equal to the amount of

the putative lien against the commercial real estate shall have

been deposited with the court in said proceedings for

application to the payment of the amount finally determined to

be due.

as aforesaid over the amount of the claim determined to be paid

therefrom shall be refunded to the party depositing same upon

application for a refund.

(d) Security in lieu of cash.--In lieu of the deposit of

any sum or sums, approved security may be entered in such

proceedings in double the amount of the required deposit or in

such lesser amount as the court shall approve which, however,

shall in no event be less than the full amount of such required

deposit, and the entry of such security shall entitle a party

to have the broker's lien discharged to the same effect as

though the required sums had been deposited in the court

aforesaid.

(e) Authority of court.--The court, upon petition filed by

any party and after notice and hearing, may upon cause shown:

(1) require the increase or decrease of any deposit or

security;

(2) strike off security improperly filed; and

(3) permit the substitution of security and enter an

exoneration of security already given.

Section 12. Revival of judgment.

Judgment upon a claim shall be revived within each recurring

five-year period. The practice and procedures to revive judgment

shall be governed by 42 Pa.C.S. § 5526 (relating to five year

limitation) and the Pennsylvania Rules of Civil Procedure.

Section 13. Severability.

The provisions of this act are severable. If any provision

of this act or its application to any person or circumstance

is held invalid, the invalidity shall not affect other

provisions or applications of this act which can be given effect

without the invalid provision or application.

Section 14. Effective date.

This act shall take effect in 60 days.