Mechanics Liens or a Leap of Faith
We are building an addition to our church. We believe we have hired a great contractor who is experienced in building facilities for religious institutions. Regardless, we are wary of mechanics’ liens, and our financing bank seems hung up on keeping the property free of liens. Is there anything we can do to minimize the possibility of mechanics liens? We want to make sure our property stays clear of any liens throughout the project. What more can we do beyond trust our builder?
– Man of Faith
Dear Man of Faith,
All the faith in the world won’t stop a subcontractor or material supplier from filing a mechanics lien if they aren’t paid. Those folks with tool belts and white work vans have bills too. You can hope they take pride in their workmanship and will leave you blessed and grateful. Those contractors and suppliers are taking a leap of faith on your builder and you by improving your property and then waiting to be paid. Ohio’s lien law (O.R.C. Section 1311) is designed to bring efficiency to the process to protect all involved. The law provides a means to limit the risk of one or many contractors placing liens on your job.
First and foremost, make sure a Notice of Commencement (“NOC”) is filed. In Ohio if you as the owner do not file a NOC, then the subcontractors and material suppliers don’t have to file a Notice of Furnishing (“NOF”). The clock for preservation of their lien rights doesn’t begin to tick until the NOF is filed. No NOC from you then no NOF from the subcontractors is required and you remain exposed for a longer period than necessary. Got it?
Secondly, don’t approve interim payments unless you have obtained lien releases for the completed work. You should not be surprised to learn that the time to make sure they stay and finish the work to your liking is before you pay in full.
Finally, stay closely involved in the process (without being a nag) so you will know the areas of the project where the subcontractor is underperforming or the materials are faulty. Disputes can be mitigated early with civil and sensible contributions from you, your builder and the provider. TEAMWORK!
What do you do when your construction project hits the skids?
On Thursday, March 16 at 4:00pm attend “Belly Up – a YouDig? Seminar ” to learn best practices on Ohio construction projects that have come to a halt mid-project.