ALP: How can I avoid surprise liens on my construction project from unknown subcontractors and/or suppliers?
Issue a Notice of Commencement. Ohio has made it easy for construction project owners, general contractors and mortgage lenders to avoid surprise liens. Any of the three may issue a Notice of Commencement.
The Notice of Furnishing gives notice, “for all the world to know,” that an otherwise unknown entity will be working on the project (and wants to get paid!).
The Notice generally includes the “who, what, when, and where” of the project. Significantly, the Notice must include the property description. The Notice must be recorded and displayed at the project site (usually in the construction trailer, unnoticed and ignored by most of us).
Recording the Notice of Commencement triggers a statutory requirement for subcontractors and suppliers to provide a Notice of Furnishing. Lien rights cannot be preserved without a Notice of Furnishing.
Keep meticulous records! Chart all subcontractors, suppliers and Notices of Furnishing. Likewise, include contract language requiring that a list of all subcontractors and suppliers must be provided. Require lien waivers when making project payments. If there are payment issues anywhere in the project chain – you will know about them very quickly, and hopefully, have a quick resolution.
All of these documents are subject to strict statutory timeframes, guidelines and “technicalities.” Timeframes vary, depending on the type of project (public, private, commercial, residential). Failure to do it right may provide a loophole for surprise liens.
