*As seen in the December issue of Dayton B2B.
Mechanic's liens are a mechanism for a contractor who, after providing labor or materials for building or real property improvements, has not been paid. Ohio law requires that a contractor follow specific steps in order to claim a mechanic's lien. This article summarizes the steps necessary for a contractor to protect potential lien rights in the event he is not paid in connection with work related to private improvements.
The owner or tenant of the property, prior to commencing work, must file a notice of commencement in the county recorder's office where the property is located for work involving a private construction project. An exception is a "home construction contracts" which is a contract between an original contractor and an owner for the improvement of any single- or double-family dwelling, or a residential condominium unit, including improvements such as driveways, swimming pools, fences, and the like unless the homeowner's lender requires a notice of commencement pursuant to the terms of the loan documents for any loan secured by a mortgage.
The notice of commencement must include, in affidavit form, the following information: (1) the legal description of the real property to be improved; (2) a brief description of the improvement; (3) the name and address of all owner(s); (4) the name and address of all original contractors (or may state "multiple contractors" for a residential dwelling); (5) the date of contract; (6) the name and address of all lenders and/or sureties; and (7) the following statement:
To Lien Claimants and Subsequent Purchasers:
Take notice that labor or work is about to begin on, or materials are about to be furnished for, an improvement to the real property described in this instrument. A person having a mechanics lien may preserve the lien by providing a notice of furnishing to the above-named designee and his original contractor, if any, and by timely recording an affidavit pursuant to 1311.06 of the Revised Code.
The owner or tenant must also post a copy of the notice of commencement conspicuously at the property and send a copy of the notice to any contractor or subcontractor who requests a copy within 10 days of receiving the request.
Within 21 days of the date he begins work or furnishes materials, a subcontractor or material supplier (who does not have a direct contract with the owner or tenant) must send a notice of furnishing to the general contractor and the owner or tenant. The notice must include the name and address of the owner and original contractor, a description of the property and the labor or materials which will be furnished. A laborer is not required to file a notice of furnishing to preserve his lien rights. If the owner or tenant has not properly recorded a notice of commencement, then the subcontractor or material supplier has 21 days from recording of the notice of commencement to send a notice of furnishing. If a subcontractor or materialman fails to send a notice of furnishing within the 21 day requirement, he loses lien rights for all work or materials furnished more than 21 days prior to the service of the notice of furnishing (or for all work if a notice is never sent).
If the contractor is then not paid, he may perfect a mechanic's lien by recording a notarized lien affidavit in the county recorder's office where the real property is located which contains the amount due, a description of property, the name and address of person(s) for whom work was done, and the name and address of the claimant. The lien must be recorded within (1) 60 days from the date on which the last labor or work was performed or the last material was furnished for work on a one- or two-family dwelling or a residential condominium unit, (2) 120 days for work on an oil or gas well or facility; or (3) 75 days for all other liens (such as liens for commercial properties). The lien claimant must also send a copy of the filed lien to the owner(s) of the property within 30 days. If the owner cannot be found, the claimant can post a copy of the lien on the property.
Once filed, the mechanic's lien is valid for six years but cannot be renewed. If the owner fails to pay the amount due, the lien holder can file a foreclosure action to enforce the lien and collect payment from the proceeds, after payment of any mortgages or other liens recorded before the mechanic's lien, after foreclosure.