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Mechanic’s liens can be a real estate headache

On Behalf of | Feb 12, 2020 | Commercial Real Estate |

Like other states, Ohio construction contractors and subcontractors have the right to file a mechanic’s lien on property they have worked on if they have not been paid for their work. The right to file a mechanic’s lien applies to both residential and commercial property.

Importantly, investors in unimproved real estate need to remember that the right to file a mechanic’s lien does not depend on whether the property owner or buyer is at fault for not paying the construction companies.

If there is a valid mechanic’s lien on the property, then the owner either has to make it right with the person who filed the lien or challenge the lien as invalid. Otherwise, they risk the possibility that the holder of the lien will force a foreclosure sale of the property.

There are ways through which someone, particularly an innocent party, can challenge the validity or the amount of the mechanic’s lien or construction lien. Someone wanting to file and then foreclose a mechanic’s lien must observe many detailed legal requirements and important deadlines. Should the person fail to do so, the failure could invalidate the lien.

Even when the construction contractor or subcontractor has a legitimate claim, options may still be available. Sometimes, negotiating a settlement with the contractor or subcontractor is the best course of action, as they will sometimes agree to accept less than the full amount of the lien.

Finally, in some circumstances, it may be possible for an innocent owner to pursue those responsible for the lien. After all, it would not be fair for a buyer of real estate to have to pay for work the seller did on the property, but this is exactly what may wind up happening if the buyer is unaware of all of his or her legal options.


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