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Can I be prohibited from sending preliminary notices in certain states?

We supplied materials to a residential property in Ohio and sent a Notice of Furnishing to the GC and owner. The property owner is working with an insurance company, and the insurance company came back to us saying they prohibit the sending pf preliminary notices or securing of lien rights on their construction projects. Is this allowed, and if so, what should we do in these situations to make sure we get paid?

1 reply

Oct 23, 2018

That's a good question. First, it's worth noting that, regardless of how the receiving party responds to a preliminary notice, that notice is still effective. i.e. If notice is properly sent and the party receiving notice later says "we prohibit notices" - that message is a moot point since they've already received the notice. Further, a party cannot unilaterally ban the use of notices and liens on their project. In Ohio, waiving lien rights via contract or some other document/agreement before performing work or receiving payment is not strictly prohibited. However, if a claimant's contract does not prohibit sending notice or utilizing liens (if necessary), and if there has been no other agreement not to provide waivers, a claimant cannot be prohibited from sending notice or utilizing their lien rights if they go unpaid. Of course, that doesn't necessarily mean that the recipient of the notice will not react negatively to the waiver - they could attempt to secure a lien waiver, or they could potentially try and have a party sending notice removed from the job. But, for a claimant who is providing labor and/or materials to an Ohio construction project, lien rights cannot be unilaterally waived or banned without prior agreement. As for how to secure payment when lien rights have been waived - there are a number of other options to secure payment. For one, a claimant can still threaten to file a lien via a document like a Notice of Intent to Lien. Because the mechanics lien remedy is such a drastic one, often, recipients will not be willing to call the bluff of a party who sends one. Further, sending a demand letter threatening specific legal action can be effective, especially when sent via an attorney. Finally, small claims court could be an option (depending on the amount of the claim) and litigation is always an option - though both can be risky, and litigation can be particularly expensive. These are just a few of many available options, and this article explains several more: Don’t Want to File a Mechanics Lien? Here Are 5 Other Options.

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