Mechanic’s Liens, as established by the Ohio Mechanic's Lien Statutes are available to Construction Managers, Original Contractors, Subcontractors, Suppliers and Laborers (all as defined by Ohio Revised Code Section 1311.01 or Ohio Revised Code Section 1311.011 for certain residential projects), who have supplied labor or labor and materials, pursuant to a contract (written or verbal), in furtherance of a privately owned construction project. There are similar liens (Affidavits for Claim) which can be filed on State or local construction projects. Neither Mechanic’s Liens nor Affidavits for Claim are available on Federal Construction projects (only Miller Act Bond Claims are available on Federal Construction projects – an article will be published soon on Miller Act Bond Claims. If you just can’t wait, please email me at RORourke@ORourke-law.com . I will expedite the article and send you a link by return email).
It is generally thought that while any subcontractor supplying labor or labor and materials may file a mechanic’s lien, no matter how distant they are from the Original Contractor, a material supplier to a material supplier has no lien rights. While there is a line of cases that recognizes this principle, it is not proscribed by statute (in fact it implies just the opposite), the principle appears to have been intended to relate to fungible goods (like crushed limestone or cement as ingredients in concrete, which while delivered to the supplier, is likely not to have been sold specifically for or used in only one job), not an item specifically ordered for the project and readily identifiable (a boiler or windows, something that is readily identifiable as containing a serial number, trade mark, name or something else that would show that the product is actually the product claimed in the Mechanic’s Lien.
For the rules for actually filing a Mechanic’s Lien, please read the Article: What is a Mechanic's Lien and How do I File One?To read other articles which have been published in the Builders Exchange Magazine on Mechanic’s Liens and other construction law topics, please visit Ohio Lien Law - BX Magazine Articles. To view current Mechanic’s Lien filings in most of the larger counties in Ohio, please visit Construction Credit News . The postings of new mechanic’s liens and lawsuits is changed weekly, so check back regularly to see what is new.
This is not intended to be legal advice and we have not created an attorney/client relationship by this posting. The specifics of your case or the law of your State may change the answer. Please consult your attorney for an accurate answer.
Monday, June 15, 2009
Saturday, June 13, 2009
What is a Mechanic’s Lien and How do I File One?
A mechanic’s lien is a security interest that a contractor, subcontractor, supplier or laborer may claim in the land and/or building which has been improved by the fruits of their labor. This is not to be confused with an “Artisan’s Lien” which is the lien of a “mechanic” in a vehicle that was repaired by the mechanic.
Mechanic’s liens across the country are creatures of statute, meaning that they do not exist but for the State statutes that authorize them. In Ohio, mechanic’s liens are first authorized by the Ohio Constitution and then enabled by Chapter 1311 of the Ohio Revised Code. Our laws are in a constant state of flux. The statutes are regularly modified by the legislature in a constant effort to repair and resolve inequities that one interest group or another has perceived. The statutes are then interpreted by our courts: trial court; district court of appeals and Ohio Supreme Court in an effort to determine what the legislature meant when they wrote the law (this isn’t crazy as it is virtually impossible to draft a law or a document without creating some ambiguity, it is the ambiguities that the courts seek to resolve, other interpretations are required because a party to the lawsuit or its lawyer may just not understand the law or is seeking to impose a new interpretation).
Ohio requires that on all private construction projects that are not “home purchase” or “home construction” projects (as defined by ORC §1311.011(A) (1) and (2) Homeowner Mechanic's Liens), the contracting party (as defined by ORC §1311.01 ORC Scetion 1311.01 - read “owner, part-owner or lessee”, whoever has contracted for the work to be performed) must prepare a Notice of Commencement (as defined by ORC Section 1311.04) file the NOC with the County Recorder of the county or counties where the project is located, and post and maintain a copy on the project). If a NOC is filed with the County Recorder, subcontractors and suppliers are to serve a Notice of Furnishing (as defined by ORC Section 1311.05 ), on the “Owner’s Designee,” if there is one identified in the Notice of Commencement or on the Contracting Party if there is no Owner’s Designee identified and the Original Contractor, unless the subcontractor or supplier is in direct contract with the Original Contractor, then the NOC need only be served on the Contracting Party or the Owner’s Designee. An Original Contractor or a supplier in direct contract with the contracting party need not serve a NOF, but should still obtain a copy of the NOC to assure themselves of the relationship among the parties and that all NOFs have been properly served, if required AND if a lien is later needed, to have all of the proper partied identified and have the legal description of the improved property to attach to the lien.
Assuming you either properly served your NOF or were not required to do so, to claim your mechanic’s lien, you need to prepare and file the Mechanic’s Lien document with the County Recorder(s) where the property is located within the time prescribed by the statute (ORC Section 1311.06), 60 days for a 1, 2 or 3 family residential project or a single unit of a condominium, 120 days for gas or oil well projects and State or local public projects and 75 days for all others (commercial projects). We have avoided the mention of Federal Construction projects because State law does not apply to Federal projects. There is no NOC, no NOF and no Mechanic’s Lien on Federal Construction projects.
Once you have filed the Mechanic’s Lien, you MUST perfect it. To perfect it, you need to serve it on the Contracting Party within 30 days of the date you filed the Mechanic’s Lien (as required by ORC Section 1311.07) Service is usually accomplished by mailing a copy of the Mechanic’s Lien to the Contracting Party or the Owner’s Designee by certified mail, but other methods are permitted (See ORC Section 1311.19). If the Mechanic’s Lien cannot be served within the 30 day period, you may post the lien on the project in a conspicuous location within an additional 10 days.
The Mechanic’s Lien will expire on the 6th anniversary of its filing. Unlike many other types of liens, the Mechanic’s Lien cannot be renewed Enforcement of your Mechanic’s Lien will come either “voluntarily” by the contracting party or original contractor paying the claim or by a foreclosure action. This “voluntary” method can occur in the ordinary course of business or when the property is sold, refinanced (either because of a draw on the construction loan, the conversion of the construction loan to permanent financing or refinance for any other reason). The resolution of a Mechanic’s Lien at sale or refinance is not required by law, but is common. It can also be “bonded off” (as permitted by ORC Section 1311.11 (C)), which is the subject of a separate article.
The Mechanic’s Lien is to be in the amount of the unpaid balance of your contract amount. Any amount over that could jeopardize the validity of your lien, so it is important to be accurate when preparing your lien.
To read articles that I have written on Mechanic’s Liens and other construction topics, please visit OhioLienLaw.com - Builders Exchange Articles. To view current Mechanic’s Lien filings in most of the larger counties in Ohio, please visit ConstructionCreditNews.com . The postings of new mechanic’s liens and lawsuits is changed weekly, so check back regularly to see what is new.
This is not legal advice and we have not created an attorney/client relationship by this posting. The specifics of your case or the law of your State may change the answer. Please consult with your attorney for an accurate answer.
Mechanic’s liens across the country are creatures of statute, meaning that they do not exist but for the State statutes that authorize them. In Ohio, mechanic’s liens are first authorized by the Ohio Constitution and then enabled by Chapter 1311 of the Ohio Revised Code. Our laws are in a constant state of flux. The statutes are regularly modified by the legislature in a constant effort to repair and resolve inequities that one interest group or another has perceived. The statutes are then interpreted by our courts: trial court; district court of appeals and Ohio Supreme Court in an effort to determine what the legislature meant when they wrote the law (this isn’t crazy as it is virtually impossible to draft a law or a document without creating some ambiguity, it is the ambiguities that the courts seek to resolve, other interpretations are required because a party to the lawsuit or its lawyer may just not understand the law or is seeking to impose a new interpretation).
Ohio requires that on all private construction projects that are not “home purchase” or “home construction” projects (as defined by ORC §1311.011(A) (1) and (2) Homeowner Mechanic's Liens), the contracting party (as defined by ORC §1311.01 ORC Scetion 1311.01 - read “owner, part-owner or lessee”, whoever has contracted for the work to be performed) must prepare a Notice of Commencement (as defined by ORC Section 1311.04) file the NOC with the County Recorder of the county or counties where the project is located, and post and maintain a copy on the project). If a NOC is filed with the County Recorder, subcontractors and suppliers are to serve a Notice of Furnishing (as defined by ORC Section 1311.05 ), on the “Owner’s Designee,” if there is one identified in the Notice of Commencement or on the Contracting Party if there is no Owner’s Designee identified and the Original Contractor, unless the subcontractor or supplier is in direct contract with the Original Contractor, then the NOC need only be served on the Contracting Party or the Owner’s Designee. An Original Contractor or a supplier in direct contract with the contracting party need not serve a NOF, but should still obtain a copy of the NOC to assure themselves of the relationship among the parties and that all NOFs have been properly served, if required AND if a lien is later needed, to have all of the proper partied identified and have the legal description of the improved property to attach to the lien.
Assuming you either properly served your NOF or were not required to do so, to claim your mechanic’s lien, you need to prepare and file the Mechanic’s Lien document with the County Recorder(s) where the property is located within the time prescribed by the statute (ORC Section 1311.06), 60 days for a 1, 2 or 3 family residential project or a single unit of a condominium, 120 days for gas or oil well projects and State or local public projects and 75 days for all others (commercial projects). We have avoided the mention of Federal Construction projects because State law does not apply to Federal projects. There is no NOC, no NOF and no Mechanic’s Lien on Federal Construction projects.
Once you have filed the Mechanic’s Lien, you MUST perfect it. To perfect it, you need to serve it on the Contracting Party within 30 days of the date you filed the Mechanic’s Lien (as required by ORC Section 1311.07) Service is usually accomplished by mailing a copy of the Mechanic’s Lien to the Contracting Party or the Owner’s Designee by certified mail, but other methods are permitted (See ORC Section 1311.19). If the Mechanic’s Lien cannot be served within the 30 day period, you may post the lien on the project in a conspicuous location within an additional 10 days.
The Mechanic’s Lien will expire on the 6th anniversary of its filing. Unlike many other types of liens, the Mechanic’s Lien cannot be renewed Enforcement of your Mechanic’s Lien will come either “voluntarily” by the contracting party or original contractor paying the claim or by a foreclosure action. This “voluntary” method can occur in the ordinary course of business or when the property is sold, refinanced (either because of a draw on the construction loan, the conversion of the construction loan to permanent financing or refinance for any other reason). The resolution of a Mechanic’s Lien at sale or refinance is not required by law, but is common. It can also be “bonded off” (as permitted by ORC Section 1311.11 (C)), which is the subject of a separate article.
The Mechanic’s Lien is to be in the amount of the unpaid balance of your contract amount. Any amount over that could jeopardize the validity of your lien, so it is important to be accurate when preparing your lien.
To read articles that I have written on Mechanic’s Liens and other construction topics, please visit OhioLienLaw.com - Builders Exchange Articles. To view current Mechanic’s Lien filings in most of the larger counties in Ohio, please visit ConstructionCreditNews.com . The postings of new mechanic’s liens and lawsuits is changed weekly, so check back regularly to see what is new.
This is not legal advice and we have not created an attorney/client relationship by this posting. The specifics of your case or the law of your State may change the answer. Please consult with your attorney for an accurate answer.
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