Court Limits Right to a Mechanic's Lien

posted by Michael R. Fortney  |  Apr 7, 2015 06:20 AM in Construction Law:Mechanic's Liens, Attested Accounts, and Bonds

In order for a contractor to have a valid mechanic's lien on property, the contractor must have performed work or furnished materials in furtherance of an “improvement” to the land. The burden is on the party claiming the existence of a valid lien to show that the work or materials contracted for were indeed used to make improvements to the land in question. According to the Cuyahoga County Court of Appeals in Great Lakes Petroleum Co. v. Jayco, the excavation of steel mill slag, the restoration of land after excavation, and the building of landscape mounds required by the local authorities building are not an improvement to land.

In that case, the plaintiff entered into a contract to supply fuel to Jayco Corporation. Jayco was then taking that fuel and either selling or otherwise delivering the fuel to another corporation, an alter ego of Jayco, and the alter ego was using that fuel to excavate slag from the property, restore the property and construct landscape mounds on the property.

The court agreed that the fuel Jayco received was used in equipment on the land in question, but it disagreed with Great Lakes' contention that the work Jayco performed on the land as required by the contract was an improvement to the land.

The court held that the grading to be done at the premises was a "remedial measure" meant to return the property to its original condition, not an improvement. Thus since the materials supplied to the project were not used for improvements Great Lakes' lien on the property was invalid.  The court further held that, because the landscape mounds were not required by the contract with the owner, but were required by the local officials, that work was not an improvement under the lien law.

Before filing a mechanic's lien in Ohio, contractors and suppliers must follow a two-step process. First, make sure that the work or materials fit within the definition of “improvement.”

If you would like more information about mechanic's liens or employment and labor issues, or if you would like to speak to an attorney, please visit our website.


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