Mechanic's liens are not regulated by federal law. If they were, all state procedures and regulations for these liens would look more or less the same. Instead, each state sets their own laws about using mechanic's liens and the steps to take to file a notice of lien.
In Ohio, the state law offers a basic framework for mechanic's liens, but leaves it to the various counties to provide appropriate procedures and forms. That means that the exact procedure for how to file a mechanic's lien depends on the county in which it is to be filed.
What Is a Mechanic's Lien?
Contrary to current language usage, a "mechanic's" lien has little to do with those who repair vehicles. Rather, most mechanic's liens are used by builders, contractors and construction firms to guarantee payment for work and materials furnished as part of a construction project. The lien is sometimes also called a materialmen's lien.
The idea of a mechanic's lien can be traced back to the days when Thomas Jefferson was trying to create a landed gentry in the young country. This legal guarantee helped citizens build farms on productive land by giving construction workers recourse if they were not paid.
The term "mechanic's lien" came from the fact that, in those days, construction workers and others who worked with their hands were called mechanics. Payment to them after filing a mechanic's lien takes precedence in case of a liquidation.
Financial Protection for Contractors
Mechanic's liens can protect general contractors, subcontractors and those who supply materials for a project. For example, if a contractor builds a new kitchen for a homeowner, and they don't pay as contracted, the contractor can file a mechanic's lien. The lien is filed against the property and cannot be removed until the occurrence of one of these events:
- Full payment being made to the contractor.
- Court order entered finding that the lien is not valid.
- Time period the contractor has to enforce the lien expires without action.
The exact time that the contractor or materials provider has in which to enforce the lien varies from state to state and, in Ohio, from county to county. Generally the governmental time limits for filing a lien and for enforcing the lien with a court action are strictly construed.
Financial Protection for Subcontractors
Mechanic's liens are intended to protect contractors who enter into a contract with the building owner, but they also protect subcontractors who enter into a contract with the general, or original, contractor.
For example, if the contractor in the above example fails to pay the electrical subcontractor for a kitchen project, the subcontractor can protect the fruits of their labor by filing a mechanic's lien.
Filing a Lien Against Property
While the subcontractor's contract is with the general contractor, the lien is still filed against the property. This type of lien forces the building owner or homeowner to get involved in the conflict.
If the owner intends to sell the building, they will be compelled to resolve a mechanic’s lien as soon as possible because it is difficult if not impossible to sell a property while a lien is in effect. A potential buyer finds the lien during a title search and would hesitate to proceed with the sale since they would be responsible for addressing the property liens.
Mechanic's Liens in Ohio
Every state has enacted laws governing mechanic's liens, and Ohio is no exception. State laws offer a basic framework for who can file liens and how to file, but counties develop their own procedures for implementing mechanic's lien laws.
The state courts interpret the laws on timing and procedure very strictly, so careful adherence is required for protection to follow.
Under Ohio mechanic's lien laws, it is entirely possible that a building owner may have to pay bills that a contractor fails to pay, the inequity of which is not something an Ohio court takes lightly. That means that strict compliance with procedures and time frames is required.
Who Can File an Ohio Mechanic's Lien?
Ohio statutes specify who is permitted to file a mechanic's lien against property. In order to have this right, a person must satisfy certain requirements:
- Any contractor or material supplier who performs work or labor, or furnishes material for a building improvement under a contract with the owner. Contract in Ohio includes an express contract or an implied one. Owner can be a part owner or a lessee.
- Any subcontractor, laborer or material supplier who performs any labor or work, or furnishes material to an original contractor on a construction project.
Services Required for Filing a Mechanic's Lien
Any material supplier can file a lien on the project if they provided:
- Materials that were intended to be incorporated in the project.
- Materials that were incorporated in the project.
- Specially fabricated materials for the project that were not resalable.
- Materials for the improvement or operation of machinery or equipment on the project.
- Tools and equipment that were rented for use on the project.
- Tools and/or equipment that were purchased for the project and have no substantial value after the completion of the project.
Ohio courts have ruled that architects are not entitled to file a mechanic's lien if they simply drew plans and specifications, separate and apart from superintendence of construction.
Filing a Mechanic's Lien in Ohio
Three basic steps are required to file a mechanic's lien in Ohio. They are the preparation and filing of these documents:
- Notice of Commencement: Notice by property owner to any potential lien claimant.
- Notice of Furnishing: Notice to building owner from potential lien claimant.
- Affidavit of Lien: The lien itself, which provides additional notice to the owner.
All three documents are regulated in Ohio as to form and timing. Forms are available online for all three, but choose with care from a reliable site. County law libraries' websites are good options to look for lien document templates.
Ohio Notice of Commencement
The first of the three documents to be prepared and filed is the Notice of Commencement. This is an affidavit that should be prepared and filed by the owner before the project begins. It must include:
- Legal description of the property.
- Summary of improvements to be performed.
- Name and address of owner or lessee who has contracted for the improvement.
- Name and address of the fee owner of the real property, if different from the contracting person.
- Name and address of all original contractors.
- Date of first contract with original contractor for the improvement.
- Identification of all lending institutions providing funding for the improvements.
- Identification of sureties on any bond that guarantees payment of the original contractor's obligations under the contract for the improvement.
- Statement to lien claimants and subsequent purchasers about potential impact of mechanic's lien.
- Identification of the person preparing the notice.
- Affidavit from the owner that verifies the notice.
The Notice of Commencement must be filed with the county recorder's office in the county where the project is located. The owner must also serve a copy of the notice on the original contractor and post the Notice of Commencement at the project site. The notice can and should be amended during the project to add any additional contractors.
Note that, in Ohio, the Notice of Commencement is not required for home construction contracts, unless a lender requires one as part of the project financing.
Ohio Notice of Furnishing
Anyone planning to file a lien in Ohio must prepare a Notice of Furnishing. This must be given to the owner and the original contractor within 21 days of the first supply of labor or materials to the project.
This notice must include:
- Name of the owner or designee.
- Name and address of original contractor under which the claimant is performing work or supplying materials.
- Name and address of the contractor in direct contract with the claimant.
- Description of the property.
- Date labor or supplies at issue were first provided.
- Name and address of the lien claimant.
The Notice of Furnishing reaches back only 21 days, protecting any labor or supplies provided 21 days before the service of the notice and going forward. Failure to timely serve the notice means that the claimant's rights are forfeited in Ohio. They can file a late Notice of Furnishing, but it only protects work starting from 21 days before it is served.
Ohio Affidavit of Mechanic's Lien
If payment is not received the contractor or subcontractor who didn't get paid can file an Affidavit for Mechanic's Lien. This places a lien on the project.
The lien must be filed with the county recorder's office where the project is located within 60 days of the date last worked on a residential dwelling; 75 days of the date last worked for commercial projects; and 120 days for construction of an oil, gas or injection well.
Service of Lien Documents
Filing the lien is only half of what needs to be done to perfect the lien. After it is filed, the lien must be served on the owner within 30 days of filing with the county recorder. Service of the lien must be accomplished by some method whereby evidence of receipt by the owner can be established, such as certified mail.
Service of any of the lien documents can be made by the sheriff. It can also be made by any method that includes a written evidence of receipt, like certified mail or hand delivery. Service is made on a corporation by serving its statutory registered agent.
Issues With Allowing the Lien Claim to Expire
Mechanic’s liens in Ohio are valid for six years. That means that the lien should be addressed during that period. Ideally, the person owing the money pays the amount due, and the lien is released. Alternatively, the lien holder can file a lawsuit in Ohio courts to foreclose the lien. But the lien holder doesn't necessarily have enough time to file a lawsuit to foreclose the lien.
One alternative is for the owner or general contractor to serve a notice to commence suit on the lien claimant, that is, the person who executed the affidavit for mechanic's lien. This notice is then filed with the local county recorder’s office.
Once the document is served on the lien claimant, they must file a lien foreclosure suit within 60 days. If they do not do so, the mechanic's lien rights will expire.
- If there is no response from the property owner, the lien will be filed with the county and must be repaid upon sale of the property in question. If the property owner disagrees, or denies that the work was done, a judge will decide the outcome of the dispute.
Teo Spengler earned a JD from U.C. Berkeley Law School. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an MA and an MFA in English/writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.