Information on Ohio's Consumer Laws from Attorney Daniel Myers, Myers Law, LLC, not legal advice
If you have ever read through the Ohio Constitution (WARNING: do not drive or operate heavy machinery afterward), you will notice it includes a lot of uncommon “rights.” A lot of these you will not find in the U.S. Constitution. One such right in Ohio is the construction contractor’s right to file a mechanic’s lien against someone’s property.
If you have a dispute with your contractor over the work performed or the amount of payment owed, it is likely that a contractor will file a lien against your property to “secure” the amount claimed by the contractor. These liens function like a mortgage. They can also be dangerous for a homeowner–if you have a mortgage, the filing of a lien likely puts you in default; if you are trying to get financing, you may be denied as a risky investment; if you lease the property, you may be evicted for violating your lease. Worse, a contractor can file a foreclosure action against you to force your home to be sold at a sheriff’s auction to satisfy the lien. Even if no action is taken by the contractor, this lien stays on your property for up to six years after it was filed, and can prevent or complicate sales of the property, as well.
You may not even know that a lien has been filed on your property. You should know, because the contractor is required to serve a copy of the lien on you shortly after it is filed. But some contractors, and their attorneys, fail to follow the law.
These liens are a powerful weapon for a contractor to persuade homeowners to make payments, even when those payments are in dispute–so long as the lien was filed as Ohio law requires. But what Ohio law giveth, Ohio law also taketh away. The law also provides homeowners with many different tools to remove the lien or punish the contractor.
As always, before taking action, you should first consult with an attorney about your specific options and rights–some of these may be better than others in your situation, and some may not be available to you. Here are some options for removing a lien under Ohio law:
First, you can pay off the lien. If you do not dispute that the money is owed, the work was perfect, and the contractor complied with Ohio law, you may want to consider calling the contractor to see what you can do to pay the lien off or settle the dispute. If you chose to pay it off, make sure you pay by check or other traceable payment method. If the lien is jeopardizing critical financing, the costs of fighting it may outweigh the benefits.
Second, if the Contractor violated the Home Solicitation Sales Act (check out Myths #1 & #9), and you are allowed to cancel your contract, you can do so and try to force the lien to be removed. This is especially helpful when the lien is filed by the company or person who you hired, as opposed to their subcontractor. No contract means no valid lien.
Third, you can file and serve a “Notice to Commence Suit” on the company or person filing the lien. You should hire a lawyer to do this for you, because the steps are very complicated and strict. If you decide to do this, you can force the contractor to sue you on the lien within 60-days of serving the notice, otherwise the contractor has abandoned the lien, and your property is released. The contractor can still sue you for non-payment, but if they do not sue to enforce the lien, your property is free from the lien.
Fourth, you can put up a cash or other bond to replace your property. Again, you need a lawyer to assist you with this step, as it involves court action. If you put up the right amount of the lien in cash or bond, and have a court approve your application to substitute the money in place of the property, the lien is removed from your land, and any action the contractor takes based on the lien must be taken against the cash/bond, not your home. Few people can afford this option, however.
Fifth, you can sue the contractor for filing a wrongful lien. If the lien was never served to you, it is invalid, and you will likely need to go to Court to get the lien removed. If the contract the lien is based on was cancelled, this may provide your lawyer with another way to invalidate the lien. If the lien was filed out of ill-will or malice, and contains intentionally false statements, your lawyer may be able to sue the contractor for slandering your title to the land, which could allow you to recover your attorney fees and punitive damages, in addition to the harm you suffered (loss of financing, etc.). Additionally, you can sue the contractor for breach of contract, and possibly for violating Ohio’s consumer protection laws. Filing a wrongful lien against a residence is itself a consumer law violation that could entitle you to triple your actual damages, plus attorney fees, even punitive damages. There are strict time limits on these claims, some as short as one year, so contact an attorney immediately.
Sixth, if you have fully paid your original contractor what is due under your contract, and did so before a lien was filed, you can file an affidavit of this fact with the County Recorder. This may have the effect of nullifying any liens filed after you made that final payment.
At the end of the day, you are better off preventing a lien from being filed on your home. If you are worried about the potential for liens against your property, you should contact an attorney before you start a project, and have that attorney draw up some lien waivers you should use. Once a contractor signs a valid lien waiver (depending on the language used), and once they receive payment outlined in the waiver, they may not be able to file a lien against your home. You should make sure to write in your contract that a contractor must sign a waiver before they can receive payment, as well, otherwise the contractors may refuse to sign such a document later.
There are many options available to a homeowner, and numerous claims a homeowner can make against a contractor that wrongfully files a lien, or files a valid lien incorrectly. Because every situation is different, and because timing is an issue, you should contact an attorney about a lien on your property immediately. Timely advice could be the difference between keeping or losing your home.