Lien rights for design professionals (such as architects and engineers) in Ohio are severely limited. They deprive such professionals of the statutory protections afforded to other project participants such as contractors, subs, and suppliers.
But recently, it appears that the Ohio legislature has finally decided to address this gap in their mechanics lien laws. Effective September 30, 2021, Ohio will expand lien rights to include registered design professionals. Here’s everything you need to know.
Current state of design professional lien rights in Ohio
Most states provide some form of lien protection for architects. However, one of the glaring exceptions is the state of Ohio…technically. Back in 1931, the Ohio Supreme Court declared that lien rights arise only when a claimant has performed work onsite that “increases the value” of the property.
Thus, under the current scheme, an architect or engineer may have lien rights, but only to the extent of any onsite work — supervising the construction, for example. But any offsite work — such as preparing surveys, design drawings, etc. — is not protected. Until now.
Ohio’s new payment assurance program for registered design professionals
On July 1, 2021, Governor Mike Dewine signed SB49 into law. This expands lien rights in Ohio to registered design professionals such as architects, engineers, and surveyors.
- Ohio SB49: Create payment assurance program for design professionals
- Primary sponsors
- Effective date
- September 30, 2021
Senator Sykes, one of the primary sponsors of this legislation, recently issued this statement regarding the passage of SB49:
“This legislation ensures that architects, engineers, and other designers will get paid for their work, regardless of the outcome of their projects… It will support hardworking Ohioans by protecting the value of their labor, which is why I am very grateful that this legislation will become law.”
Who will have design professional lien rights in Ohio?
Under this new legislation, architects, landscape architects, professional engineers, and professional surveyors (collectively “design professionals”) are granted lien rights under certain circumstances.
First and foremost, design professional lien rights will not exist on public projects or residential projects; strictly on commercial projects. Also, in order to be eligible for lien protection, the professional must have a written contract with the owner of the property interest. Keep in mind that only the design professional named in the contract may have a claim. Lien rights will not be available for any of the design professionals’ employees, agents, or independent contractors.
Now that we’ve established who will have these new lien rights, let’s take a look at the actual process.
How to file an OH design professional lien claim
Interestingly enough, there is no statutory deadline for filing a claim under this new legislation. However, the earlier the better, as such claims will be subordinate (i.e ranked lower in priority) to any mechanics lien claim (regardless of the date of recording) and any preexisting mortgages or other liens on the property.
The affidavit itself must be filed in the county recorder’s office in the county where the project is located, and contain the following information:
- Claimant’s name
- Owner of the interest in the property’s name
- Record owner’s name (if different than owner)
- The legal description of the property & parcel number (metes and bounds not required)
- The parties to, and date of, the contract
- Amount of the claim
- A statement that information is true and accurate to the Claimant’s best knowledge
- Signed by the Claimant, and notarized.
Lastly, once recorded, a copy of the recorded claim must be served on all parties listed in the affidavit by any mailing method that provides third-party written proof of receipt. Note that failing to serve the claim won’t invalidate a claim, hoever, 5the court may consider any equitable remedies for failing to serve an interested party.
Enforcing an OH design professional lien claim
After an Ohio design professional lien claim has been filed and served, it will only be valid for a period of two years after the claim was recorded. If no enforcement action is commenced within that timeframe, the claim will expire and no longer be enforceable. This is significantly shorter than the enforcement deadline for traditional lien rights in Ohio; which is 6 years from when the claim was filed. So design pros will need to pay particularly close attention to their timeframes.
Note: If an interested party serves the claimant with a demand to enforce the claim, an enforcement action must be commenced within 60 days of receipt of the demand, or the claim will expire.
Satisfaction and release of the claim
If and when the claim is paid in full, the claimant must file a lien release within 30 days of receipt of payment (i.e. satisfaction). If not, any party with interest in the property or anyone who is named in the lien affidavit may record their own affidavit stating that underlying claim has been satisfied.