Liens on Commercial or Business Property

While most of the information on this website is geared towards fighting mechanic’s liens on residential property, and gives tools and information to homeowners about using Ohio consumer laws to protect them from liens and their construction contractors, liens can also be placed on business property or commercially-owned property. When that happens, some of the options for fighting and removing the lien are available to property owners, but many options available to homeowners and consumers are not available to a business.

For example, if a corporation owns an investment property, apartment, condo, or business location, and wants to fight a lien placed by a contractor, the corporation does not have any rights under the Consumer Sales Practices Act or Home Solicitation Sales Act, and cannot attempt to cancel the contract or sue for triple damages under those laws. Those laws only apply to services and goods purchased primarily for personal, family, and household use, not business use.

Additionally, while consumers are protected from paying twice (once to the general contractor, and once to the lien claimant), businesses have no similar statutory protection. Under Ohio law, a business that owns property can be forced to pay a lien claimant if the lien turns out to be valid, even if the business previously paid the general contractor for the same work!

Options for Removing Mechanic’s Liens on Business or Commercial-owned Property.

Many of the same claims and options are still available to you. For example, a business can still pay a lien, bond off a lien, file and serve a notice to commence suit, sue the contractor or material supplier that filed the lien, and sue for quiet title (declaration that the lien is invalid) or for slander to title (to recover damages and attorney fees against the lien claimant), among other things. For a list of options (which includes some of the consumer options not applicable to businesses), check out our page about options to fight or remove liens.

The Importance of the Notice of Furnishing.

Businesses have another layer of protection, called the Notice of Furnishing. On many business or commercial construction projects in Ohio, the property owner can file a Notice of Commencement (not to be confused with a notice to commence suit), which includes information about the project, the contractors, the owners, etc. If this notice is used, all subcontractors and material suppliers need to submit what is called a Notice of Furnishing, which puts the owner on notice of who the subcontractors or material suppliers are that are working on the project.

A Notice of Furnishing has to comply with various legal requirements, and according to Ohio mechanic’s lien law, has to be in substantially the following form (at least as of 4/10/2018, as the form may change from time to time and the statute must be consulted instead of this information):

Notice of Furnishing

(For use in connection with improvements to property other than public improvements)

To: ……………………………………………….

(Name of owner, part owner, or lessee or designee from the notice of commencement)

…………………………………………………..

(Address from the notice of commencement)

To: ……………………………………………….

(Name of original contractor from notice of commencement)

(Address of original contractor from notice of commencement)

Please take notice that the undersigned is performing certain labor or work or furnishing certain materials to ………….. ……………………………………………….(name and address of other contracting party)………………….. in connection with the improvement to the real property located at …………………… The labor, work, or materials were performed or furnished first or will be performed or furnished first on ………… (date).

WARNING TO OWNER: THIS NOTICE IS REQUIRED BY THE OHIO MECHANICS’ LIEN LAW. IF YOU HAVE ANY QUESTIONS ABOUT YOUR RIGHTS AND DUTIES UNDER THESE STATUTES YOU SHOULD SEEK LEGAL ASSISTANCE TO PROTECT YOU FROM THE POSSIBILITY OF PAYING TWICE FOR THE IMPROVEMENTS TO YOUR PROPERTY.

……………………………….

(Name and address of lien claimant)

By …………………………….

(Name and capacity of party signing for lien claimant)

……………………………….

(Address of party signing)

Date:

If a subcontractor or material supplier fails to serve a notice of furnishing on the owner or designee of the owner (the person listed in the Notice of Commencement), or delays too long in sending one, then the subcontractor or material supplier may not be able to claim a lien for any work done; or, they may only have a lien on the work done during a very short period of time and may not be able to lien for the majority of the work performed.

It is possible that getting a mechanic’s lien in the mail may be the first time the property owner finds out about a subcontractor working on their project. If this happens, it is essential to speak to an experienced construction lawyer about whether a Notice of Furnishing was required, or whether a lien is proper.

Slander to title claims have a one-year statute of limitation, so the property owner must act quickly in seeking legal advice.

The information on all pages of this website is intended as general information, not as legal advice.  It should not be relied on as legal advice, and unless you have a signed attorney-client agreement with Myers Law, LLC, Myers Law, LLC does not represent you as your attorney.