How Do I Get a Lien Released in Ohio?
Full Question:
Answer:
If there is a dispute between subcontractors and the principal contractor regarding payment, such that the subcontractor will not release his lien, under Ohio statutes the property owner is entitled to withhold payment to the principal contractor in the amount of the lien. In response, the principal contractor and lending institution may demand that lien holder provide them with information regarding the amount of the lien and the dates upon which work was performed. The owner or lending institution may only release payment to the original contractor when, the lien holder has given notice that he has been paid, or the subcontractor issues a lien release, or the original contractor provides a bond, or the time under which a lien may be filed has expired. O.R.C. 1311.01(B)(8).
After a lien has been filed, a property owner may serve a Notice to the Lien holder to Commence Suit. Within thirty days of serving the notice the property owner must file the notice with an affidavit indicating how service was accomplished. The lien holder has sixty days after being served to file suit or his lien will be rendered void. O.R.C. 1311.11(B)(3)
If you wish to use the legal system to resolve your dispute, you may want to review the following general information regarding contract law and breach of contract actions:
Contracts are agreements that are legally enforceable. A contract is an agreement between two parties that creates an obligation to do or refrain from doing a particular thing. The purpose of a contract is to establish the terms of the agreement by which the parties have fixed their rights and duties. An oral contract is an agreement made with spoken words and either no writing or only partially written. An oral contract may generally be enforced the same as a written agreement. However, it is much more difficult with an oral contract to prove its existence or the terms. Oral contracts also usually have a shorter time period within which a person seeking to enforce their contract right must sue. A written contract generally provides a longer time to sue than for breach of an oral contract. Contracts are mainly governed by state statutory and common (judge-made) law and private law. Private law generally refers to the terms of the agreement between the parties, as parties have freedom to override many state law requirements regarding formalities of contracts. Each state has developed its own common law of contracts, which consists of a body of jurisprudence developed over time by trial and appellate courts on a case-by-case basis.
An unjustifiable failure to perform all or some part of a contractual duty is a breach of contract. A legal action for breach of contract arises when at least one party's performance does not live up to the terms of the contract and causes the other party to suffer economic damage or other types of measurable injury. A lawsuit for breach of contract is a civil action and the remedies awarded are designed to place the injured party in the position they would be in if not for the breach. Remedies for contractual breaches are not designed to punish the breaching party. The five basic remedies for breach of contract include the following: money damages, restitution, rescission, reformation, and specific performance. A money damage award includes a sum of money that is given as compensation for financial losses caused by a breach of contract. Parties injured by a breach are entitled to the benefit of the bargain they entered, or the net gain that would have accrued but for the breach. The type of breach governs the extent of damages that may be recovered.
Restitution is a remedy designed to restore the injured party to the position occupied prior to the formation of the contract. Parties seeking restitution may not request to be compensated for lost profits or other earnings caused by a breach. Instead, restitution aims at returning to the plaintiff any money or property given to the defendant under the contract. Plaintiffs typically seek restitution when contracts they have entered are voided by courts due to a defendant's incompetence or incapacity.
Rescission is the name for the remedy that terminates the contractual duties of both parties, while reformation is the name for the remedy that allows courts to change the substance of a contract to correct inequities that were suffered. In order to have a rescission, both parties to the contract must be placed in the position they occupied before the contract was made. Courts have held that a party may rescind a contract for fraud, incapacity, duress, undue influence, material breach in performance of a promise, or mistake, among other grounds.
Specific performance is an equitable remedy that compels one party to perform, as nearly as practicable, his or her duties specified by the contract. Specific performance is available only when money damages are inadequate to compensate the plaintiff for the breach.
Promissory estoppel is a term used in contract law that applies where, although there may not otherwise be an enforceable contract, because one party has relied on the promise of the other, it would be unfair not to enforce the agreement. Promissory estoppel arises from a promise which the promisor should reasonably expect to induce action or forebearance of a definite and substantial character on the part of the promisee and which does induce such action or forebearance in binding if injustice can be avoided only by enforcement of the promise. Detrimental reliance is a term commonly used to force another to perform their obligations under a contract, using the theory of promissory estoppel. Promissory estoppel may apply when a promise was made; reliance on the promise was reasonable or foreseeable; there was actual and reasonable reliance on the promise; the reliance was detrimental; and injustice can only be prevented by enforcing the promise. Detrimental reliance must be shown to involve reliance that is reasonable, which is a determination made on an individual case-by-case basis, taking all factors into consideration. Detrimental means that some type of harm is suffered.
Reasonable reliance is usually referred to as a theory of recovery in contract law. It was what a prudent person might believe and act upon based on something told by another. Sometimes a person acts in reliance on the promise of a profit or other benefit, only to learn that the statements or promises were either incorrect or were exaggerated. The one who acted to their detriment in reasonable reliance may recover damages for the costs of his/her actions or demand performance. Reasonable reliance connotes the use of the standard of an ordinary and average person.
Please see the following OH statutes:
1311.11 Notifying lienholder to commence suit.
(A)(1) The owner, part owner, lessee, mortgagee, or any other person with an interest in real property upon which a lien has been taken, or any original contractor or subcontractor who has provided a bond, cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or other reasonable security in accordance with division (C) of this section, may notify the lienholder to commence suit on the lien, by written notice delivered to the lienholder in one of the following manners:
(a) At the address of the lienholder as shown in the affidavit of lien;
(b) Through his agent indicated on the affidavit of lien;
(c) At any later address of the lienholder that has been delivered in writing to the owner, part owner, lessee, mortgagee, other person with an interest in the real property, original contractor, or subcontractor.
Except as otherwise provided in this section, the notice to commence suit shall be served by the sheriff of the county in which the land upon which the lien has been taken is situated, upon payment of the same mileage and fees as provided by law with respect to the service of summons. Except as otherwise provided in this section, if the address of the person to be served, as shown on the affidavit of lien or other writing presented by the person seeking service of the notice to commence suit, is outside the county in which the land is located, but within the state, the sheriff shall forward the notice to commence suit to the sheriff of the county in which the address of the person to be served is located, for service by such sheriff.
(2) At the request of the person seeking service of the notice to commence suit, the sheriff may send the notice by certified mail, return receipt requested, to the address of the lienholder or the lienholder’s agent, whether that address is within the county in which the land is located or elsewhere. If the address of the person to be served is outside the state, the sheriff shall send the notice by certified mail, return receipt requested.
If the notice is sent by certified mail, return receipt requested, service of the notice is deemed completed when a return receipt has been received indicating the delivery of the notice. If a return receipt shows a failure or refusal of delivery, service is deemed completed after the sheriff mails a second copy of the notice by ordinary mail, provided that the ordinary mail envelope is not returned by the postal authorities within fourteen days of the date of mailing with an endorsement showing failure of delivery.
(3) If service cannot be made at the address shown on the affidavit of lien or other writing presented by the person seeking service of the notice to commence suit, and if the lienholder or his agent cannot be located by diligent search, the notice to commence suit may be served by publication once each week for six consecutive weeks in a newspaper of general circulation in the county in which the land is located. Upon completion of service in all cases, a copy of the notice shall be furnished to the owner, part owner, lessee, mortgagee, or other person requesting service, which copy shall have the return of the sheriff endorsed on it, and in addition, in cases of service by certified mail or by publication, the copy shall have attached to it the return receipt or an affidavit that service by publication has been completed.
(B) Within thirty days after service is completed, the person who sought service shall do all of the following:
(1) Execute an affidavit setting forth the manner in which service was accomplished;
(2) Attach to the affidavit a copy of the notice to commence suit, with the sheriff’s return endorsed on the notice or with a certified mail return receipt indicating the service or attempted service;
(3) File the items with the recorder of the county in which the property is located.
The recorder shall index and record the notice in the same manner and receive the same fees as for releases of mortgages and other liens.
If the lienholder fails to commence suit upon the lien within sixty days after completion of service upon him of the notice to commence suit, or if the action is commenced but dismissed with prejudice before adjudication, the lien is void and the property wholly discharged from the lien. When a lien is void by reason of failure to commence suit within sixty days after service of the notice to commence suit, the claim upon which the lien was founded is not prejudiced by the failure, except for the loss of the lien as security for the claim.
(C)(1) Before or after suit has been commenced upon a lien, and whether or not a notice to commence suit has been served, a bond, cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or, subject to this division, other reasonable security may be provided in double the amount of the claim secured by the lien or, if the claim secured by the lien exceeds five thousand dollars, in the amount of one and one-half times the amount of the claim, conditioned upon payment of any judgment and costs. A bond shall be drawn in favor of the lienholder and executed by sufficient sureties, if required. Other reasonable security may be provided only with the consent of the lienholder.
An application shall be made to the court of common pleas for approval of a bond, cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or other reasonable security. The bond, cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or other reasonable security shall be filed with the application, and notice of a hearing on the application shall be given to the lienholder or his agent. If the application is filed before suit is commenced on the lien, the notice of hearing shall be served on the lienholder or his agent in the same manner as provided in division (A) of this section for service of the notice to commence suit. If the application is filed after suit is commenced, the notice of hearing shall be given in the same manner as a notice of hearing on motions or other applications before the court.
(2) At the hearing on the application, the only issues to be determined are the sufficiency of the bond, cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or other reasonable security, and, if the security is not a bond, cash deposit, general obligation of any state government or of the United States government, or obligation insured by an agency of the United States government, whether the lienholder has consented to the security and the security is reasonable. If the court finds the bond, cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or other reasonable security sufficient and, if the security is not a bond, cash deposit, general obligation of any state government or of the United States government, or obligation insured by an agency of the United States government, that the lienholder has consented to the security and that the security is reasonable, it shall make an entry of approval. If a bond is approved, the court shall order that the bond be retained in the file. If a cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or other reasonable security is approved, the court shall enter an order that it considers appropriate relative to the manner in which the cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or other reasonable security shall be secured. During the pendency of a suit upon the lien, the court may enter an order that the amount of other reasonable security is to be increased or decreased or an order that action is to be taken with respect to the security that the court deems appropriate.
(3) As of the date of the entry of approval, the security of the bond, cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or other reasonable security shall be substituted for the security of the lien, and the lien is void and the property wholly discharged from the lien. If an action on the lien has been or is commenced and a bond, cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or other reasonable security has been or is provided in accordance with this section, the action on the lien is terminated automatically, the land is freed from the lien, and the action on the lien may proceed as an action on the bond, cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or other reasonable security, through, if appropriate, a supplemental pleading bringing in as additional parties sureties on the bond.
A bond is discharged and the sureties released, or a cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or other reasonable security provided is released, upon failure of the lienholder to commence suit within the time allowed pursuant to division (B) of this section, or if a suit on the security is dismissed with prejudice to the plaintiff or judgment is entered against the plaintiff, or if judgment is entered in favor of the plaintiff upon payment of the judgment with costs. The court may direct that costs and a judgment in favor of the plaintiff in a suit be paid from a cash deposit, general obligation of any state government or of the United States government, obligation insured by an agency of the United States government, or other reasonable security, and may direct, if necessary, that other reasonable security be sold and the proceeds of the sale be applied to the judgment and costs.
1311.06 Affidavit - time period for filing - contents.
(A) Any person, or his agent, who wishes to avail himself of sections 1311.01 to 1311.22 of the Revised Code, shall make and file for record in the office of the county recorder in the counties in which the improved property is located, an affidavit showing the amount due over and above all legal setoffs, a description of the property to be charged with the lien, the name and address of the person to or for whom the labor or work was performed or material was furnished, the name of the owner, part owner, or lessee, if known, the name and address of the lien claimant, and the first and last dates that the lien claimant performed any labor or work or furnished any material to the improvement giving rise to his lien. If the affidavit is recorded, the omission or inaccuracy of any address in the affidavit does not affect its validity. The affidavit may be verified before any person authorized to administer oaths, whether agent for the owner, part owner, lessee, lien claimant, or an interested or other party.
(B) The affidavit shall be filed within one of the following periods:
(1) If the lien arises in connection with a one- or two-family dwelling or in connection with a residential unit of condominium property as defined in Chapter 5311. of the Revised Code, within sixty days from the date on which the last labor or work was performed or material was furnished by the person claiming the lien;
(2) If the lien arises under section 1311.021 of the Revised Code, within one hundred twenty days from the date on which the last labor or work was performed or material was furnished by the person claiming the lien;
(3) If the lien is one not described in division (B)(1) or (2) of this section, within seventy-five days from the date on which the last of the labor or work was performed or material was furnished by the person claiming the lien.
(C) The affidavit may be in the following form:
“AFFIDAVIT FOR MECHANICS’ LIEN.
State of Ohio,
County of …............., ss: ..............................., whose address is …..........., being first duly sworn, says that …............. the lien claimant, furnished certain material or performed certain labor or work furtherance of improvements located on or removed to the land hereinafter described, in pursuance of a certain contract, with …......, the owner, part owner, lessee, original contractor, subcontractor, or other person, as the case may be, whose address is …... The first of the labor or work was performed or material was furnished on the …........ day of ….., ..... (year). The last of the labor or work was performed or material was furnished on the …..... day of …......., .... (year), and there is justly and truly due …........., the lien claimant, therefor from …........., the owner, part owner, lessee, original contractor, subcontractor, or other person, as the case may be, over and above all legal setoffs, the sum of …......... dollars, for which amount …........, the lien claimant, claims a lien on the land, building, or leasehold, of which ….. is or was the owner, part owner, or lessee, as the case may be, which property is described as follows:
................................................................
................................................................
................................................................
.......................................
Sworn to before me and subscribed in my presence this ….... day of …...., ... (year).
................................................................
................................................................
...............................................................”
(D) For purposes of this section, the description of the property is sufficient if made in accordance with division (B)(1) of section 1311.04 of the Revised Code.
(E) The recorder shall indorse upon every affidavit the date and hour of its filing, and record it in a separate book kept for affidavits. No exemptions apply against any lien under this chapter.
(F) One or more laborers may authorize an agent to prepare, execute, file, and serve the affidavit required by this section. The affidavit may set forth the claims of one or more laborers, provided that the affidavit separately itemizes the claim of each laborer and may set forth claims for wages that are contractually due but are unpaid.
1311.20 Damages for neglect or refusal to release lien.
If, after the amount of his lien has been satisfied or adjudged against him in an action thereon, a lienholder fails within thirty days thereafter to cause the lien to be released, such lienholder is liable to the owner, part owner, or lessee for all damages arising therefrom, not exceeding the amount of the lien and costs.
In a county in which the county recorder has determined to use the microfilm process as provided by section 9.01 of the Revised Code, the recorder may require that release of the lien be by separate instrument with acknowledgment as required for the original affidavit. The original instrument bearing the proper endorsement thereon may be used as the separate instrument. The separate instrument release shall be recorded in the book required by section 1311.06 of the Revised Code. The fee for recording shall be that provided by section 317.32 of the Revised Code for satisfaction of a mortgage.
