Mechanic's Liens in Ohio for Homeowners

As a homeowner in the Buckeye State, your home provides not merely a place to live, but also a valuable asset. You might wish to sell or refinance it over the course of your living there. Unfortunately, mechanic's liens placed on your property can impede these efforts.

Liens are essentially clouds on the title to your home, usually filed by contractors or subcontractors who claim that they are owed money for work done on the property.

Imagine, for example, a roofer who claims that she fixed your roof without adequate compensation, or a brick company that claims it provided siding to your house but was never paid the contract balance. These entities can potentially sue you for breach of contract. But assuming they've met all the prerequisite paperwork requirements, they can also secure their financial interests without filing a formal lawsuit against you in Ohio's Court of Common Pleas, by filing a lien.

What exactly is a mechanic's lien, and what can you do if one is placed on your Ohio home?

What Is a Mechanic's Lien Under Ohio Law?

As an Ohio homeowner, you have hopefully never encountered a mechanic's lien. These legal documents are somewhat obscure, and many homeowners have not heard of them at all.

A lien is a document that gets publicly filed in an Ohio county clerk's office in the county where the relevant property is located. Once filed, the lien creates a situation where your home title is subject to the contractor's stated financial interest in it.

If your project is large enough, either you or the contractor might have been in contact with the county office long before a lien is file. The lien filing can be the culmination of a three-step process, which requires filing:

1. Notice of Commencement
2. Notice of Furnishing
3. Mechanic's Lien.

However, if you're the owner of a single-family home, the first two steps can be skipped; in which case the contractor will be able to file the lien as its first point of contact with a government agency. (We'll briefly describe the other two steps below in any case.)

Step 1: Notice of Commencement

Unlike in most states, Ohio requires that before certain property improvements begin, the property owner or contractor files a "Notice of Commencement." (See Ohio Rev. Code § 1311.04.) However, the law exempts "home construction contracts" for single- and double-family homes, and creates a few other exceptions. (See Ohio Rev. Code § 1311.011.) The Franklin County Law Library offers a model version of the Notice form. It asks for information such as the company name, the property owner's name, the location of the property, and details about the financing and the improvements to be made; and it also describes an option for filing a payment bond, such that contractors on major projects might never have to file mechanics liens at all.

Step 2: Subcontractors File Notice of Furnishing

As the next step in these larger projects, any subcontractors would need to file a Notice of Furnishing with the same clerk's office, describing what work or materials they have been or will be providing on the property.

Step 3: Mechanic's Lien

If you were to fail your contractor the agreed-upon sum once the work is done, the contractor could go to the clerk's office in the county where your property is located and file a lien, using a form like this one.

Importance of Negotiating With Your Ohio Contractor Before a Lien Is Filed

In most situations, you should be able to avoid the nuisance of having mechanic's liens filed on your property, by engaging in a reasonable negotiation with your Ohio contractor. Liens are typically a sign of frustration and a relationship that has broken down. The contractor believes you are either ignoring payment requests or have no intention of entering into a good faith negotiation.

If your contractor asserts that you owe an extra sum of money, do not ignore the phone calls or invoices. While you might think that this "strong signal" will convince your contractor to simply go away, the contractor might view it as a sign of disrespect, prompting a lien or a lawsuit or both.

You and the contractor might have a good faith disagreement about whether certain work was part of the contract, or about its quality. Have a frank discussion, or consider going to mediation. In mediation, a third-party neutral (often an attorney or individual with experience in the construction industry) would help you and the contractor negotiate a fair settlement.

In both negotiation and mediation, you should be open to creative settlement strategies. Rather than paying a lump sum, for instance, perhaps you could schedule payments over time. Rather than a monetary settlement, maybe you could offer the contractor a public endorsement or reference. Rather than fighting in court, you could offer the contractor discounted payment in exchange for a limited scope of ongoing work. The possibilities depend on the facts of the situation.

Of course, there are legal remedies available to Ohio homeowners to fight a lien after it is filed. However, you are likely to save time and money if you find a way to settle the payment dispute directly with the contractor. This does not mean you need to give into all of the contractor's demands, but it does mean that you should keep in mind the costs of legal action and do your best to avoid it.

Ohio's Mechanic's Lien Laws

If a lien is placed on your property, it will be helpful to familiarize yourself with the statute that governs liens in Ohio. The procedure for the filing of the notice is contained in Ohio Rev. Code § 1311.04.

Like with most states' lien statutes, Ohio's is complex, containing many exceptions. These tend to depend on the type of property involved and the work performed. But there are general concepts to remember as you plan your response to a lien filed on your property:

• Who can file a lien in Ohio? Any contractor, subcontractor, or supplier who constructs, alters, erects, improves, repairs, demolishes, removes, digs, or drills any part of any improvement real property can file a lien. (See Ohio Rev. Code § 13.01.) Ohio law defines "improvement" broadly, as "constructing, erecting, altering, repairing, demolishing, or removing any building or appurtenance thereto, fixture, bridge, or other structure, and any gas pipeline or well including, but not limited to, a well drilled or constructed for the production of oil or gas; the furnishing of tile for the drainage of any lot or land; the excavation, cleanup, or removal of hazardous material or waste from real property; the enhancement or embellishment of real property by seeding, sodding, or the planting thereon of any shrubs, trees, plants, vines, small fruits, flowers, or nursery stock of any kind; and the grading or filling to establish a grade." You'll want to make sure that whoever is filing the lien has a right to do so under the statute.
• Architects and engineers cannot file liens in Ohio. Unlike some states, architects or engineers who merely provide designs or plans to improve real property are not entitled to file liens. For them, a lawsuit, not a lien, is the only available remedy for a homeowner's nonpayment.

Actions to Take When Faced With a Mechanic's Lien in Ohio

How can you get rid of a lien once it's filed? There are several strategies to get the lien removed in Ohio. The first, as mentioned, is to negotiate a resolution with your contractor.

A second option is to obtain what's known as a "lien bond," through a surety company. The bond essentially guarantees payment to the contractor in the amount of the lien if the contractor is successful on the legal claims, but also removes the lien from your property record.

A third option is to petition a court (the Ohio Court of Common Pleas serving your county) to remove the lien. Your grounds could include that the contractor never did the work that the lien claims, or that the work was already compensated.

You can also attack legal deficiencies in the contractor's lien. The most common involves the deadline for filing. The deadlines are spelled out in Ohio Rev. Code § 1311.06. On residential projects, the deadline is only 60 days from when the contractor or subcontractor last provided labor or materials. In other words, if the lienor attempts to file a lien more than two months after the "last date," you can ask a court to strike the lien.

There is one other important deadline to keep in mind. Under Ohio Rev. Code § 1311.13, mechanic's liens are valid for six years. This gives lienors six years in which to either settle with the owner or contractor, or file a suit to foreclose on the lien in an Ohio state court. If they do neither, the lien can be stricken as invalid.

Keep these deadlines in mind. Often, busy contractors will sit on their rights for too long, in which case Ohio law will no longer permit their liens to be sustained against your property.

Retaining an attorney with experience in construction or real estate law might be worth your expense, depending on the amount of money in dispute. Check out Guide to Finding an Excellent Attorney.