Architects & Engineers, Armed with Lien Rights
Recently we published an article on the common ways contractors, subcontractors and suppliers lose their lien rights in connection with the work they perform on a given project. Traditional mechanic’s lien laws have been in place in Ohio for nearly 200 years. Effective September 30, 2021, Ohio expanded lien rights to include design professionals as well.
First introduced as Senate Bill 136 in 2019, the bill took two legislative sessions and a lot of work by AIA Ohio to make it law under Ohio Rev Code 4703.20 et seq. Examples creating the need for the law are the situations where a developer employs design professionals to prepare drawings and surveys for purposes of seeking financing and does not inform the design professional of lack of funding until late in the design process, or where an owner simply does not pay for design services furnished. Ohio Senate Bill 49 expands lien rights to design professionals including architects, engineers, landscape architects and surveyors. Notably, construction managers as agents did not make the cut. The new law applies to commercial projects but not to public or residential projects. Additionally, design professionals must have a written contract with the property owner.
Interestingly, there is no statutory deadline for filing the lien. Mechanic’s liens must be filed within 75 days of a contractor’s or supplier’s last day of work on a commercial project (60 days on a residential, and 120 days on a public project). Meanwhile, the designer’s lien is valid for only 2 years from the date it is recorded, after which time the lien will expire if no enforcement action has been commenced. This timeline is shorter than the 6 years to enforce rights under a mechanic’s lien in Ohio. Mechanic’s liens and mortgages take priority over the design professional’s lien.
So other than the fact that design professionals now have lien rights in Ohio, what are the takeaways? Historically, designers have been advised to exercise caution in pursuing unpaid fees, based on the strong correlation between unpaid fees and troubled projects and the frequency with which efforts of design professionals to collect unpaid fees through litigation result in counterclaims alleging professional negligence. Lien rights may seem to provide designers with more leverage, but that caution remains, perhaps more so given the threat to the owner’s real estate. It will also be worth monitoring how the creation of lien rights for design professionals impact end-of-project negotiations where contractors have made claims stemming from purported design issues, which are disputed by the designers themselves.