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# 1510 - OHIO: MECHANICS' LIEN LAW

The Ohio Mechanics' Lien Law took effect on projects involving real property carrying a general contract date of January 1, 1992 or later. Ohio Revised Code §1311:04-19 gives lessors of equipment or tools statutory rights in perfecting a Mechanics' Lien. The law is intended to minimize the need to file liens by getting claims paid promptly and make liens a more cost effective remedy when necessary.

Two notices are necessary. The Notice of Commencement (NOC), and the Notice of Furnishing (NOF). The latter is your responsibility when renting equipment. The Notice of Commencement is completed by the owners listing: the owner of the property, legal description, contractor, lender, surety, and other information to assist potential lien claimants. The owner is to record the NOC with the County recorder and post it on the job site. The Notice of Furnishing is completed by the subtrade.

To have lien rights you must do the following:

Request in writing the NOC. This should be available from the general contractor and the owner or the subcontractor. You are to receive the NOC within ten days of written request. Make all requests by a method that will provide a receipt (e.g. Certified Mail).

Once you receive the NOC you need to serve an NOF to the owner and general contractor if you do not have a contract with the general contractor. The NOF must be served within 21 days of the first date of work. This notice should also be sent by a method, such as Certified Mail, that will produce a receipt.

The owner and the original contractor have a right to directly pay the claim of any subcontractor or supplier who serves an NOF and set-off this amount against the general or subcontractor who failed to pay the supplier.

The lien filing deadline periods are calculated from the last date of your work on the site. (1 or 2 unit occupied residential - 60 days; commercial, industrial - 75 days; oil and gas - 120 days).

Here is the three step procedure for claiming Mechanics' Liens:

1. Serve of Notice of Furnishing

2. Prepare and file an affidavit of lien with the County Recorder, per the above schedule

3. Serve a copy of affidavit of lien on the owner.

The affidavit of lien must be sworn to by a representative of the claimant with knowledge of the claim, must be notarized and contain the amount due over and above all credits and set-off, a description of the property, and the first and last dates that the claimant provided work and material on the job site. Also required is the name and address of the lien claimant, the person or company who contracted for the claimant's services, and the contracting and fee owners.

The Mechanics' Lien Law requires all lien claimants to serve a copy of the affidavit of lien on all owners of the improved property within 30 days of its being field with the County Recorder. Take the necessary steps to give yourself the right to a Mechanics' Lien. Without following the proper procedures, you will have no rights.

• 1993 CHANGES TO MECHANIC'S LIEN LAW

The mechanic's lien law (House Bill 238) became effective January 1, 1992, radically changing the procedures for perfecting mechanic's liens in Ohio. The legislation essentially made Ohio a "notice state" -- requiring that an individual seeking to exercise lien rights must notify the involved parties that he is providing labor or materials to the project.

• The bill's original intent was to help protect general contractors and owners from "hidden liens" from remote tier subcontractors and suppliers while simultaneously promoting prompt payment to subcontractors and suppliers once the general contractor receives payment from the owner. Subsequently, many other revisions were proposed relative to the mechanic's lien chapter to remove conflicting and antiquated provisions, promote uniformity and eliminate impractical aspects of the old law. Changes to the mechanic's lien law became vast and comprehensive. As passed, the legislation represented the most sweeping change in the mechanic's lien law in the last 50 years.

Shortly after the new mechanic's lien law was enacted, interested parties realized that inadvertent drafting errors were in the bill so "cleanup" legislation was drafted and proposed (Senate Bill 338) to correct these problems.

The most significant recent changes, which should become effective in mid-April, 1993 are as follows:

• The first significant problem occurred as a result of the last-minute addition of home purchase contracts, such as spec homes, to the require-ments of filing Notices of Commencement. This created an unusual problem in that the builder of a spec home is also the owner. In other words, the traditional "subcontractor" is actually an "original contractor" and therefore, all of these companies must be listed on the Notice of Commencement. In effect, greater time and expense was required for preparation and amendment of Notices of Commencement, placing hardship on some builders and their lenders.
• The recent changes will eliminate the need to list multiple original contractors in the residential builder/owner situation and should reduce the cost and effort attendant to preparing Notices of Commencement on such jobs. O.R.C. §1311.04 (B)(6).
• Notice of Commencement must now include the date the owner or lessee first executed a contract with the original contractor on the job. O.R.C. §1311.04 (B)(7); 1311.252 (B)(4). This is supposed to reduce confusion about whether the project falls under old or new law and eliminate "decoy" Notices of Commencement.
• Owners or lessees on home purchase contracts will no longer have to post Notices of Commencement. O.R.C. §1311.04 (G)(2). Home builders had complained that it was impractical to post such notices on small residential jobs and succeeded in getting a special exception for themselves on residential projects.
• Water works companies are added to the list of utilities that are exempt from the normal Notice of Commencement requirements if they elect to do so. O.R.C. §1311.04(Q).
• The recent changes clarify the original intent that subcontractors and suppliers do not have to serve Notices of Furnishing if the owner or lessee fails to record a Notice of Commencement. O.R.C. §1311.04 (R); 1311.05 (H).
• The changes clarify the original intent that no supplier who has privity of contract with an owner or lessee has to serve a Notice of Furnishing. Nor does a subcontractor or supplier have to serve a Notice of Furnishing upon the original contractor if a residential Notice of Commencement states that multiple contractors are involved. Also, a subcontractor or supplier does not have to serve an amended Notice of Furnishing if the Notice of Commencement is amended later. O.R.C. §1311.05.
• The statutory affidavit for mechanic's lien form will now refer to "lien claimant" rather that "deponent". O.R.C. §1311.06.
• The presumption that the person who contracts for the work is authorized agent for all part owners of the property is not effective when the other part owners have a lessor/lessee relationship with the contracting person.O.R.C. §1311.10.
• The statutory right to pay directly the claim of a subcontractor or supplier who served a Notice of Furnishing and set-off the amount against the person who hired the unpaid subcontractor or supplier is extended to original contractors, rather than just owners as previously. O.R.C. §1311.15 (B)(2).
• Service of a Notice of Furnishing effectuated by certified mail is deemed accomplished on the date of mailing (not receipt).O.R.C. §1311.19(B).
• Another important clarification concerns the definition of "owner" under the prompt payment act. The original act was intended to apply to all public and private commercial construction projects in Ohio. While the original bill specifically stated that it should "apply to any project involving an improvement of public improvement," some argued that the definition of owner was not broad enough to include public owners.
• The recent cleanup bill makes it crystal clear that the prompt payment act applies to both public and private work, through its new definition of "owner". O.R.C. §4113.61 (F)(6).
• Efforts to make the Notice of Furnishing a prerequisite to perfect a payment bond claim on public projects failed, therefore subcontractors and suppliers on public work still retain the ability to assert bond claims when they fail to comply with the requirements of the new lien law.

-- April 1993 (Effective January 1, 1992, Revised April 16, 1993) This summary is provided by Don Gregory of Emens, Kegler, Brown, Hill & Ritter, Attorneys at Law.

Note: For a sample Notice of Furnishing for Private Improvements, click here.

Note: For a sample Notice of Furnishing for Public Improvements, click here.