Lien waivers in Ohio

On Behalf of | Jul 17, 2020 | Business Litigation |

Mechanic’s liens are vital in ensuring contractors, suppliers and designers receive payment for their work. Even though homeowners do not often pay their painters or roofers (because that is usually your job as the contractor), any laborer can use these liens to pressure homeowners to ensure everyone involved in building their new home receives payment.

As FindLaw notes, the justification behind these liens is to ensure that these workers receive payment for enhancing and improving an owner’s property. But there are open-ended ways this payday insurance may disappear.

The lien waiver

If homeowners insist, they may secure a lien waiver with you, the contractor, in the construction agreement. This stops any worker from filing a lien — essentially forfeiting that security interest.

Without a lien option, obtaining payment may come down to individual lawsuits against the homeowner instead. In the case of contractors failing to pay builders, it may require lawsuits against them. That takes time and money.

Ohio’s open interpretation

According to Ohio statutes, the state does not regulate the form, language or timing of a lien waiver. This allows for construction projects to have agreements that may forfeit lien rights depending on the language used. Ohio also does not prohibit the waiving of future lien rights, nor does it prohibit waiving said rights before payment. If contractors or workers sign on to a project with those clauses in the agreement, they risk their payment by suspending one of their greatest tools.

This legal environment requires workers to be vigilant in what projects they join. It is crucial that both contractors and those they contract understand what lien rights are at stake.