5 Biggest Mechanics' Lien Pitfalls to Avoid
Updated: May 16, 2020
As discussed in the Part 1 Primer on Mechanics’ Liens, Ohio's mechanics’ lien laws are specifically designed to provide protection to contractors, subcontractors, material suppliers, and laborers on construction projects in the event of non-payment for the work they performed, or the materials that they provided.
A properly filed Mechanics’ Lien will remain on the property in question until the lien holder gets paid for the labor or services provided. Additionally, as discussed previously, courts in Ohio recognize the inherent unfairness to the owner of the property or contractor in these situations, and so will invalidate any Mechanics’ Lien unless it strictly complies with all requirements.
The following are some of the biggest pitfalls to avoid so you can ensure that your Mechanics’ Lien is properly executed and filed.
1. Failing to Preserve Your Lien Rights
In Ohio, a construction project officially begins with the filing of a Notice of Commencement. The Notice of Commencement is an Affidavit which is filed with the county recorder detailing certain aspects surrounding the scope of work to be performed, as well as providing specific information on the parties involved in the project.
If a Notice of Commencement has been properly executed and filed, subcontractors and materialmen must prepare and file a Notice of Furnishing, and serve it upon the proper parties within twenty-one (21) days of the first day of work, or the first day that materials were provided on a project. Failing to properly file and serve a Notice of Furnishing can be catastrophic and cause you to forfeit your lien rights.
2. Failing to Timely File your Lien
Without question, this is where most of the problems I see relative to Mechanic’s Liens occur. Failure to timely file a Mechanics’ Lien is devastating to a claim. The first thing a court will look at is the timing of your filing.
According to the Ohio Revised Code, a Mechanics’ Lien must be filed with the county recorder's office where the project is located within seventy-five (75) days date last worked on a commercial project.
For a residential project, the deadline is sixty (60) days. If you are working on an oil, gas, or injection well, that time limit is one hundred twenty (120) days. R.C.1311.06(B).
How do you calculate your last day of work?
A contractor's last day of work is generally the last day you were on the project. Therefore, punch list work will qualify for extending the last day worked, but it is critical to understand that warranty work will not.
For material suppliers, the general test is when the materials were last delivered to the project.
3. Failing to Provide Complete and Accurate Information
Ohio law requires that the Affidavit of Mechanics’ Lien must include certain information. If you timely file the lien but fail to provide the requisite information, your lien will be ineffective and unenforceable.
According to Ohio law, your Mechanics’ Lien must include (a) the amount due over and above all set-offs, (b) a legal description of the property subject to the lien, (c) the name and address of the person for whom the work was performed or the material provided, (d) the name and address of the owner, (e) the name and address of the lien claimant, and (f) the first and last dates that work was performed or supplies were provided.
Any deficiency in your lien relative to the items above will invalidate your lien rights. It is absolutely critical to have all of this information, and to have made the effort to confirm that the information is correct.
4. Failing to Provide Proper Notice
Remember, that preparing and executing a flawless Mechanics’ Lien is only part of the solution to getting you paid for work performed or
materials furnished. Ohio law mandates that a Mechanics’ Lien must be served to the proper parties within thirty (30) days of its filing with the county recorder. You must serve the lien by some method whereby evidence of receipt by the owner may be established (overnight delivery, certified mail, hand- delivery) R.C. 1311.19(A).
5. Allowing Your Mechanics’ Lien to Expire
Generally, Mechanics’ liens are valid for six (6) years in Ohio. However, there is a mechanism in place which could substantially shorten that time-frame. Under Ohio law, if a Notice to Commence Suite is properly filed and served on the lien claimant, the lien claimant now has only sixty (60) days to commence a lien foreclosure suit to get paid on the lien. If you receive a Notice to Commence Suit and do not correctly take the appropriate steps, including filing a foreclosure of the lien within that sixty (60) day period, your Mechanics’ Lien rights will expire, and any further attempt to enforce the lien will be barred.
Mechanics’ Liens, when properly executed and filed, provide an excellent opportunity for subcontractors or materialmen to secure an interest in the property, thus exponentially increasing your chances of getting paid for the work performed or materials furnished on a project. However, there are costly mistakes that, if made, will devastate your lien rights, and substantially impair your ability to get paid on a project.
Contact Law Offices of Kevin C. Cox, your local Coshocton Attorney, for further information on Mechanics’ Liens, or on any other construction-related matters.