When you are hired for a job, you want to be paid for it. If that doesn’t happen, what are your options? A mechanic’s lien may be the answer.
Television makes home renovation look so easy. However, the professionals in the business know how often they have had to come in to rescue the property owner who has gotten in over his head. Television can also be misleading by making the legal process seem simple and quick. The work for both lawyers and contractors may be challenging, but the shows never really get into the business side of the projects or the legal process. And viewers seldom see subcontractors trying to collect payments from general contractors, generals pressing homeowners for at least a part of that last installment or anyone going to court.
The truth is, it is much more interesting and much more fun to see how a home is transformed from shack to chalet than it is to see people filling out forms and filing them with the county recorder’s office. On the other hand, not filing those documents could easily result in highly dramatic scenes, even courtroom scenes, between any of the parties.
What happens if someone doesn’t get paid?
When a contractor or anyone else who works on or provides materials for a construction project does not get paid as promised, that person or company can file a mechanic’s lien. A lien will establish the creditor’s legal interest in the property, including the right to collect from the property owner even if the debt is owed by the general contractor. Collection actions can even force a property owner to sell.
In Ohio, the procedure depends on the type of project, particularly if the project is for a homeowner who intends to live in the home. The differences include the types of documents filed and the timing for filing them — important details that cannot be ignored.
If a creditor misses a deadline or fails to file the proper documents, collecting the amount owed will be much more difficult. An experienced attorney can make sure the details are taken care of. If perfected according to statute — that is, if the creditor or his attorney takes all of the necessary legal steps to establish the claim — the lien must be paid before the property can change hands.
The last point raises an important issue: The lien is against the property, not the property owner. Say an electrician was not paid for work done on a home. He files a lien against the property, expecting that he will be paid when the property owner sells.
It may not happen often, but it has happened before: The property owner could sell and skip town right away without clearing the lien. Because the lien is against the property, not the property owner, the new owner is now responsible for the debt. The new owner may fight it, but he cannot sell the property until the lien is cleared.
When is a mechanic’s lien not a good idea?
If everyone has been paid, there is no need for a lien. For some projects, it is important to establish the right to file a lien, but the lien is only appropriate if someone has not been paid in full. A mechanic’s lien is not an invoice.
If the project is for the government, it is not possible to file a lien. The principle of sovereign immunity applies. Ohio law provides alternative methods to collect the debt from governmental entities, but the process is different from the lien process. It may be worthwhile to contact an attorney for help.
It is important to remember, too, that a mechanic’s lien is not a judgment. A lien establishes the right to be paid and the lienholder’s priority as a creditor. A lawsuit is the only way to obtain a court order.
The ins and outs of the mechanic’s lien process can be time consuming and, for some, intimidating. If you are wondering if you need a mechanic’s lien, the question to ask is whether the process is worse than not being paid for work or materials. And remember: Help is out there. An experienced attorney can guide you through the process or even take care of it for you, allowing you to get back to work.
So remember, before you head out on your next job make sure you have the proper legal tools at your disposal and ready, just in case you run into what can often be the toughest part of the job … getting paid.