Liens - limiting lien rights

By Michael L. Fortney

Contents


What is a lien waiver?

A. Partial lien waiver

Upon making progress payments, the owner or general contractor will require the contractor to waive all lien claims that the contractor may have for the work invoiced.  Such partial lien waiver requirements must be contained in the contract.  Partial lien waivers are often used in conjunction with an Affidavit of Contractor.

B. Final lien waiver

Upon completing the job, the contractor must usually complete a final lien waiver.

back to top

Can a contractor be forced to waive his lien rights?

The Fairness in Contracting Act states that the requirement to sign a final waiver of claims in order to obtain final payment is void and against public policy, if the contractor has asserted a claim or request an adjustment to the contract price.  R.C. 4113.62(B).  No longer will contractors be caught between waiving a previously asserted claim, and getting paid for their work.

back to top

Is a no lien contract clause enforceable?

An owner in Ohio may have a contract provision providing that a contractor may not file a lien on a project.  The enforceability of such a provision is questionable.  However, some Ohio courts have upheld such "no lien" provisions against contractors that sign them.  Seveco, Inc. v. C&G Investment Associates, 1977 LEXIS 7341 (Franklin Cty. 1977).

If a contractor agrees to a no lien provision, the contractor must put the same language in any contracts he enters into with lower tiered contractors or material suppliers.

back to top

How should a contractor protect its lien rights in contracts and in waivers?

Make sure a lien waiver is contingent on payment, either partial or final.  Only waive liens through the date of the invoice, not through the date of the payment.

Look for no lien clauses in your contract, and in the contract with the owner, if that contract is incorporated by reference.  A no lien clause in the contract with the owner may be incorporated into a lower tier contract, if there is incorporation language in the lower tier contract.  Such incorporation language is usually enforced. 

back to top

Most Recent Articles

NLRB Declares Chipotle Company Policies Unlawful An Administrative Law Judge (ALJ) for the National Labor Relations Board (NLRB) issued her ruling in the Chipotle case ...
Ohio Court of Appeals Upholds Arbitrator’s Authority When Arguably Construing or Applying Contract A recent ruling by the Ninth District Court of Appeals ruled that a trial court cannot vacate an arbitration award beca ...
Ohio Supreme Court Upholds Liquidated Damages Provisions in Construction Contracts The Ohio Supreme Court overturned the Fourth District Court of Appeals' holding that a $700 per day liquidated dama ...
2nd Circuit Agrees with NLRB; Facebook "like"s are Protected Activity In 2014 the National Labor Relations Board (NLRB) issued its ruling in  Triple Play Sports Bar . It decided that&n ...
NLRB Revises Joint-Employer Standard as Applied to Staffing Agencies In a recent decision, the National Labor Relations Board (NLRB) clarified its joint-employer standard, deciding that em ...