Information on Ohio's Consumer Laws from Attorney Daniel Myers, Myers Law, LLC, not legal advice
Earlier this year a Cleveland west-side developer / contractor / investment company and its owner were sued by a consumer. At the center of the case was a false mechanic’s lien, and various threats, intimidation, and deceptive/unfair acts taken by the contractor and its owner. The contractor claimed to be owed between $10,000 and $17,900. The consumer claimed that she was forced to buy another lot to build her home on because the lien made it impossible to get a mortgage on her original lot.
What if I were to tell you that after hearing all of the evidence and arguments, a unanimous jury decided the contractor was not entitled to any money, and awarded it $0? That the jury ended up awarding the consumer a substantial amount against the contractor and its owner, which the Court increased to over $300,000 because of the Ohio Consumer Sales Practices Act? It’s not that crazy.
There are many reasons for the specific outcome, but the large damages, and the reason the court tripled the amount, all stemmed from a bad mechanic’s lien. If the contractor and its owner never signed or filed the false lien, the consumer never would have incurred the damages she claimed to be owed. It’s likely the contractor would have only owed a few thousand dollars, or nothing at all. It is likely a lawsuit would never have been filed.
A mechanic’s lien is an affidavit that construction contractors can file with the County Recorder’s Office against a property where they performed labor or provided materials to improve the land. It’s not filed against a consumer or property owner, but against their land. Material suppliers, general contractors, and subcontractors can file liens. Generally, architects, and engineers cannot. Mechanic’s liens are not the same liens your car mechanic might have for work on your vehicle. An auto mechanic’s lien is called an artisan’s lien. Why don’t we call a mechanic’s lien a construction lien, instead? Why don’t we call an auto mechanic’s lien a mechanic’s lien? Because these laws date back over 100 years, and that would be too easy.
Mechanic’s liens can create big problems for the property owner, the person filling out the lien, and the contractor claiming the lien.
For the property owners and consumers on the receiving end, a lien can destroy their financial situation. Liens can hold up the sale of a home, require a lot of money to be held back from a sale, damage the credit of a consumer, result in foreclosure, put a homeowner in default on a mortgage, make it so other contractors won’t work with the homeowner, or cause other problems.
Liens can make it impossible to obtain a mortgage, loan, line of credit, or other financing where the land is supposed to “secure” the financing. Banks won’t lend to someone if the bank’s mortgage is going to be second in line behind a contractor’s mechanic’s lien (for example, when a lien is filed on a property before a mortgage is obtained for the property). That’s what the consumer claimed in the trial discussed previously. She had already sold her original home, in the hopes of building on her new lot. But she found that no bank would finance her construction with the lien on the new lot, and she was forced to buy a second new lot to build her home. This can cost a homeowner many thousands if not hundreds of thousands of dollars, plus higher interest rates, penalties for taking money out of retirement accounts early, tax liability, legal costs, fees, and stress.
For the contractors claiming the lien, if they make any mistakes or provide false information in the affidavit, it could be (1) a crime, (2) could make them liable for slander to title, (3) could put them in violation of the Consumer Sales Practices Act or Home Solicitation Sales Act, and (4) could cause them serious expense if they are forced to foreclose on the lien. There are other risks, as well. And it’s easy to make a mistake. Ohio’s lien law is very old, poorly written, and confusing. It often has a lot of technical steps and actions that a contractor must take in particular ways before the lien can be filed.
The liability the contractor’s face over a bad lien can be huge. In the trial discussed previously, although the jury did not find that the false statements were recklessly made (no slander to title), they did find the lien contained false statements, and did find the lien was wrongful, and therefore awarded a large amount (based on the cost to the consumer for purchasing another similar lot) against the contractor under the Consumer Sales Practices Act. Even for simple, “innocent mistakes” of a contractor, the law could entitle a consumer to triple actual damages suffered. Because of the types of violations involved, the Court trebled (tripled) that amount. A false, mistaken, or invalid lien can be the difference between having to pay $2,000 or having to pay $300,000.
For the lawyers, company owners, or individuals who sign and file the for the contractors, they also face the risks that the contractors face. Lawyers who regularly and routinely file liens also face potential liability under the Federal Fair Debt Collection Practices Act for any wrongful debt collection activities related to the lien or other collection attempts or later attempts to collect the debt in litigation, putting them on the hook for all of the damage they cause, or statutory damages when no economic harm happened to the consumer, plus attorney fees. We often end up pursuing lawyer debt collectors over the bad liens they file on behalf of their clients.
Liens are not safe. Liens cannot be ignored. Liens can cause chaos in your life. If you discover that you have had a lien filed against your home, it is important to immediately reach out to an attorney to determine what your best course of action is, what can be done, and what to expect. Don’t sit back and hang your hat on “well, I’m the one that is right and the truth will always win.” Every situation is different. A dispute only ends up in front a jury because the judge has decided that either side could win, depending on who is believed or not believed by the jury. Eight people on a jury in one case might view and decide something differently than another jury. When have you ever known everyone in your community to agree 100% on something? 20 years after the death of Elvis Presley, a poll was taken and found that 4% of those polled believed Elvis was still alive. What if your jury is made up mostly of that 4%? What if you never make it to a jury because the contractor’s lawyer knows the rules of court better than you? You can’t do this alone, you need a lawyer to navigate the claims with you.
If you don’t get immediate legal assistance, you may never make it to your day in court. Because of the complexities involved in these cases, it is important to have a lawyer assist you in planning and properly managing the legal issues and strategy early.