Contractor and Subcontractor Payment Act applies to mixed-use projects involving both residential and non-residential or commercial units.

The Contractor and Subcontractor Payment Act (CASPA), 73 Pa. Stat. Ann. §§ 501 et seq., applies to construction contracts, except those contracts involving public works projects and construction contracts for the improvement to real property consisting solely of six or fewer residential units under construction simultaneously. In order to be entitled to relief under CASPA, a party must first establish a contractual right to payment pursuant to either a written or oral construction contract and a subsequent breach of that construction contract. Under the circumstances listed in CASPA, an owner, contractor or subcontractor who fails to make payment to a contractor or subcontractor in compliance with the statute may be held liable for interest, penalties, attorney’s fees and litigation expenses. 

The project at issue in El-Gharbaoui was a multi-use one involving a church, daycare facility and two residential apartments. Despite the inapplicability of CASPA to projects involving the improvement of six or fewer residential units which are under construction simultaneously, the court concluded that CASPA applied to the mixed-use project at issue in El-Gharbaoui because “the objective of CASPA would be thwarted if the statute were deemed inapplicable to construction contracts that involved covered commercial structures, including mixed-use development, simply because the construction contract involved improvements on the same land or building to six or fewer residential units.” 
 

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