The “Homeowner Amendments” to Ohio Mechanic’s Lien law significantly limits the rights of subcontractors and suppliers to file mechanic’s liens against a homeowner’s property. These apply if the owner has paid the builder in full before receipt of a copy of a mechanic’s lien. Payment in full means payment of the contract price less the cost to finish the construction and for warranty work (which can be difficult to prove). Despite full payment being made and there is no right to a lien, subcontractors may still file and maintain a lien. Some subcontractors will refuse to release the lien even after they know the owner has paid in full.
While a lawsuit (e.g., slander of title) is an option, it could be costly and time consuming. But allowing the property to remain encumbered by liens is not prudent, particularly if the homeowner envisions refinancing or selling the property. In both those instances, the lender and purchaser will require the property to be free and clear of all liens and encumbrances. Fortunately, the title insurance process may provide a viable option to effectively remove the liens (without a formal release from the lien claimants).
The homeowner must first serve notice (via certified mail) on the lien claimant establishing that the owner entered into a contract with the builder and paid the full contract price prior receiving the liens. The initial notice may be in the form of a recorded affidavit or written notice. After 30 days from the date of service, the homeowner must record an affidavit setting forth the facts noted above, the evidence of the proof of service, the lien claimant’s failure to release their lien as required by the statute and a statement that the lien is void. In the absence of an objection from the lien claimant by a recorded affidavit, the title insurer may ignore the lien and remove it as an exception on the title commitment. This ensures that the property is free and clear at least with respect to mechanic’s liens. The specifics and permissibility of this procedure must be confirmed with the actual title company, but options beyond an expensive lawsuit exist to benefit the homeowner.