A General Overview of Mechanic Liens for Companies

In a perfect world, contractors would all be paid as agreed upon prior to all completed projects. Unfortunately, this isn’t a perfect world. Once a project is completed, if bills and invoices aren’t paid, what leverage do contractors have against property owners to force payment in court? 

Contractors have the ability, when certain criteria are met, to file what is called a Mechanic’s Lien against property owners to protect the value (and their interest) that they added to a particular property by virtue of their work. A Mechanic’s Lien is a legal claim that can be made against a home or other property - often when payments have not been made in a timely manner. When contractors file a Mechanic’s Lien, it is a debt being attached to the title of the property. 

It is important to follow Mechanic’s Lien laws carefully. For example, courts may be hesitant to enforce an improperly filed lien where a subcontractor was not paid for its work against a property owner that has fully paid a general contractor for construction.

Who Can File a Mechanic’s Lien

Under Ohio law, anyone in contract with a property owner or lessee to carry out improvements on the property may file a Mechanic’s Lien upon breach of express or implied contract. 

This right, by virtue of their relationship with a general contractor, extends to:

• Subcontractors

• Laborers

• Material suppliers (if materials were supplied, incorporated, or provided to the project- Equipment provided can be subject to liens if returned in a valueless condition)

• Engineers and architects (for on-site work - not off-site or consulting work)

Mechanic’s Lien Steps

Step one: Notice of Commencement

The first step in filing a Mechanic’s Lien claim is a Notice of Commencement. This notice should be prepared and filed before a project begins by an owner, part owner, or lessee. It is a document for all potential Mechanic's Lien claimants that work is beginning on the property and includes information necessary to file future liens. A Notice of Commencement should be filed before any construction project is initiated in Ohio.

Step two: Notice of Furnishing

Potential Mechanic’s Lien claimants may need to provide a Notice of Furnishing within 21 days of providing work or services to the project. This notice is given to a property owner and to a general contractor (if applicable). Failure to provide a Notice of Furnishing can be waived in some cases if the contractor is still working on the site; however, its purpose is to preserve the contractor’s right to file a Mechanic’s Lien if necessary in the future.

Step three: Affidavit of Mechanic’s Lien

If a contract is breached and payment is not received, affected contractors can file an Affidavit to file a Mechanic’s Lien on the property. 

The Affidavit is a document sworn under penalty of perjury by an affected contractor including, at a minimum:

• The amount due after all set-offs, if any;

• The legal description of the property;

• The name and address of the person or company the work or material was provided for;

• The name and address of the property owner;

• The name and address of the lien claimant; and

• The first and last date work was performed or supplies were delivered at the property

The Affidavit must be filed with the county recorder’s office where the property is located (not where an affected contractor resides) according to this schedule:

• Residential dwelling - 60 days from date of last work 

• Oil, gas, or injection well - 120 days from date of last work

• All other projects - 75 days from date of last work

There is no grace period. The “last day of work” is when a contractor’s work is complete or when a contractor or supplier’s last order is delivered. Ohio law states that, in general, punch list work will extend these deadlines, but warranty work will not.

How to Serve the Mechanic’s Lien

After filing, the Affidavit for Mechanic’s Lien must be served on the property owner within 30 days. Service can be completed by any method that proves the receipt of service. Personal service is not required.

Overnight or certified mail, hand-delivery by anyone over 18 not involved in the legal action, or by a process server are all acceptable methods of service. Corporations may be served through their designated agent. If service by mail is not sufficient, the claimant may request an additional ten days for service by posting at the job site. 

The amount claimed in an Affidavit may only include the total for work done and supplies used in connection with the project. It cannot include attorney fees and court costs. If a foreclosure process is initiated against a property, any other liens ahead of a Mechanic’s Lien have precedence. Liens are paid in the order that they were filed.

Mechanic’s Liens are an important tool to protect a contractor’s right to payment for work provided. Keep in mind that the rules are strict and the deadlines are important. Before filing or serving any document, consult an attorney to be sure the process is being properly followed.