Mechanic’s Lien FAQ
Ohio Subcontractor Mechanic’s Lien Frequently Asked Questions (FAQ)
The lien law states that every person, subcontractor, laborer, or supplier who performs any labor or work, or furnishes material, for a construction project, has a right to place a lien on the project property if they are not paid for the work performed on the project.
Contractors cannot place a lien on property for work performed on different projects, only for work performed on that specific property. If a contractor is performing work for one general contractor on multiple projects, a lien cannot be used to collect payment from another project.
A Notice of Commencement (“NOC”) is a document that can be filed in the county recorder’s office of the county where the project is or will be taking place. The document is filed by the owner or the owner’s representative. After a NOC is filed, any contractors who are not directly under contract with the owner (subcontractors and suppliers) must serve a Notice of Furnishing (“NOF”) after the filing of the NOC, but within 21 days of starting work on the project, in order to fully protect the subcontractor’s lien rights.
You can think of a Notice of Commencement as a protection for the owner of the project. If the owner is having work done, the owner is subject to potential mechanic’s liens. After filing a NOC, the owner is only obligated to pay mechanic’s liens for subcontractors and suppliers that not only performed work on the project, but that also served the owner with a NOF. The owner can use the Notices of Furnishing it receives in order to keep track of the project and payments the owner issues to the general contractor.
As you may have guessed from reading about the Notice of Commencement (“NOC”), a Notice of Furnishing (“NOF”) is a necessary item for subcontractors and suppliers to send to the owner of the project in order for the subcontractor or supplier to protect its lien rights in the event of non-payment by the higher-tier contractor.
Notices of furnishing must be served on both public and private projects, but they must only be served if the owner has first filed a notice of commencement. However, since most owners want to protect themselves when performing a construction project, it is a safe bet that if a general contractor is involved, the owner has most likely filed a notice of commencement, and thus the subcontractor or supplier should serve a notice of furnishing even if the notice of commencement has not been located.
It is extremely important to keep your record of serving the notice of furnishing. You should keep a copy of the notice, along with proof of service, with the signature received from serving by certified mail, UPS, or similar. Failure to provide proof of service of the notice of furnishing can be fatal to a mechanic’s lien claim.
On private projects, anyone under contract with someone other than the owner must serve a notice of furnishing.
On public projects, anyone under contract with someone other than a prime contractor must serve a notice of furnishing.
A notice of furnishing can be served late, but if it is served late it only protects work performed in the 21 day window preceding service of the notice of furnishing. For example, a contractor has a $200,000 contract. The contractor realizes it forgot to serve a notice of furnishing but then serves the notice. The contractor calculates that it performed half of its work more than 21 days prior to achieving service. In the event of non-payment in that scenario, the contractor would only be able to file a mechanic’s lien for $100,000, because only half the work was performed after serving a notice of furnishing.
Oftentimes, the late service of a notice of furnishing is not fatal to a mechanic’s lien, because the contractor in the scenario above may have been paid the first half of the contract amount, and it is only the second half that is at issue, meaning the contractor can still file a lien for the entire amount owed, despite missing the initial notice of furnishing deadline.
Thus, it is a good rule of thumb to serve a notice of furnishing on every project, even if the notice is late.
The deadline for filing a mechanic’s lien is a certain number of days from the contractor’s last date of work on the project and differs depending on the type of project.
The deadlines for filing a mechanic’s lien affidavit are 60 days for residential buildings, 120 days for public projects, and generally 75 days for all other projects, including private commercial projects.
A mechanic’s lien is actually an affidavit of mechanic’s lien. An affidavit is a sworn or affirmed statement. The Ohio Revised Code contains an example affidavit of mechanic’s lien. Generally, the affidavit of mechanic’s lien must contain the lien claimant’s name and address, the name of the owner of the property, the property description, first and last dates of work, the name of the party the lien claimant contracted with, and the amount owed (which is also the amount of the lien).
The affidavit must be sworn or affirmed by the lien claimant and notarized. After notarizing the lien affidavit must be recorded, in the office of the county recorder in the county in which the project took place, within the deadline required by the project.
Recorders' offices have strict rules regarding the margins for documents. They also have detailed fee structures. Oftentimes, mechanic’s liens and other documents are rejected by the recorder if not filed correctly, or if the amount of payment is incorrect. It is a good practice to leave a healthy window to prepare and record your mechanic’s lien, in case something goes wrong with the initial filling.
The final item on the mechanic’s lien checklist is to perfect the mechanic’s lien.
Just as the method of securing a mechanic’s lien was slightly different on public and private projects, the method of perfecting a lien is the reverse for public and private projects.On a private project, recall that the mechanic’s lien must be recorded in the county recorder’s office within the deadline prescribed by the Ohio Revised Code. In order to perfect the mechanic’s lien, the lien must be subsequently served on the owner of the property within 30 days of recording. On a public project, recall that the lien affidavit must be served (not recorded) on the public authority within 120 days. In order to perfect the lien on a public project, the lien affidavit must be subsequently recorded, in the county recorder’s office in the county where the project took place, within 30 days of service of the lien on the public authority.
You really only have two options in this scenario, wait, or file suit. Waiting can work if the property is sold, refinanced, or something else where a title company takes a look at the title and sees the lien, and requires the owner to deal with the lien before taking any action related to the property.
Filing a suit on the lien is also known as foreclosing on the lien. In a foreclosure action, you will be forced to prove facts related to the underlying debt. For this reason, suits on mechanic’s liens are almost always against both the owner and the general contractor, as the subcontractor generally has a breach of contract claim against the general contractor, and a lien claim against the owner.
Below you will find a cheat sheet developed by Fortney Law with important dates to remember on each project in order to preserve and protect your right to file a mechanic’s lien.
Feel free to print, download, or otherwise share this sheet. Please give Fortney Law a call if you have any questions along the way.