What Does It Mean to “File” a Lien? Is that Different than “Recording” a Lien? According to One Case in Ohio, They’re Different.
In legal decisions, the court relies on the “plain text” of statute when it issues a decision. Interpreting plain text can be a challenge when seemingly innocuous words force us to pull out a dictionary to determine the true meaning. Today’s innocuous, yet critical, word? File.
The Ohio Court of Appeals recently heard the case, Kirk Excavating & Constr., Inc. v. RKJ Ents., LLC, in which the lien claimant argued its mechanic’s lien was filed when the affidavit was delivered to the country recorder’s office, despite the document being returned to the lien claimant for not complying with statutory requirements.
First, Filing Deadlines in Ohio (private commercial projects)
In Ohio, you should serve a preliminary notice upon the owner, lessee, designee and prime contractor within 21 days from first furnishing. A late notice may be served, however, the lien will only be effective for furnishings provided 21 days prior to serving the preliminary notice and thereafter.
The mechanic’s lien should be filed within 75 days from last furnishing and claimants must file suit to enforce the mechanic’s lien within 6 years from the filing of the lien and within 60 days from being served with a notice to commence suit.
The mechanic’s lien deadline is a bit longer for projects on oil or gas well facilities, which is the project type in this case. When furnishing to an oil or gas well facility, the mechanic’s lien should be filed within 120 days from the date of last furnishing.
The lien claimant, Kirk Excavating & Construction, Inc. (Kirk), contracted with general contractor, RKJ Enterprises, LLC (RKJ) to perform oil and gas construction work. Kirk furnished between April 21, 2014 and May 12, 2014 and invoiced RKJ for $332,320.
When RKJ failed to pay Kirk, Kirk sent an affidavit of lien to the country recorder’s office. The affidavit was sent sometime between July 1st and July 23rd. Unfortunately, Kirk did not provide a proper legal description of the property within its lien, so the recorder’s office returned the affidavit to Kirk.
Based on its furnishing dates, Kirk’s lien needed to be filed by September 9, 2014 (120 days from May 12). It wasn’t until December 8, 2014, that Kirk’s second affidavit was recorded. Clearly, the deadline for filing the lien had passed and Kirk’s lien was untimely. Kirk proceeded with a suit action, at which time RKJ disputed the validity of Kirk’s lien.
The court stated, “the affidavit is required to be filed for record within 120 days from the date the last labor or work was performed.”
Kirk claims the initial affidavit, the one returned by the recorder’s office for insufficient property description, was delivered to the recorder’s office within 120 days of Kirk’s last furnishing.
Now to Define File
First Kirk stated the words “filing” and “recording” are two separate actions. Specifically calling out the statute text “shall make and file for record”:
“…shall make and file for record in the office of the county recorder in the counties in which the improved property is located, an affidavit showing the amount due over and above all legal setoffs, a description of the property to be charged with the lien, the name and address of the person to or for whom the labor or work was performed or material was furnished, the name of the owner, part owner, or lessee, if known, the name and address of the lien claimant, and the first and last dates that the lien claimant performed any labor or work or furnished any material to the improvement giving rise to the claimant’s lien.”
The court agreed; “to file” and “to record” are two different actions.
Next, Kirk contended that “filing” and “delivery” are the same action. Kirk “asserts all it was required to do was to have the affidavit delivered to the recorder’s office for the lien to be considered filed.”
Unfortunately for Kirk, the court disagreed with this argument for two reasons. The first reason gets a bit muddied, bear with me. In its decision, the court relied on two separate sections of the Ohio Revised Code, the one regarding the mechanic’s liens and chapter 317, which governs the county recorder’s offices.
In chapter 317 the four following words are used: filing, recording, presentation and received. The court states that presentation and received are “more akin” to delivery and “one might conclude filing is more than delivery and if the statute meant delivery was all that was required the word presented or received would have been used.”
OK: filing and delivery are not synonymous.
There is additional discussion in the case, of whether the recorder’s office could reject the affidavit based on missing/inaccurate information. Obviously, the recorder’s office can reject documents. You may recall, Kirk failed to properly identify the liened property, which caused the recorder’s office to return the document. While the affidavit was incorrect, the true issue is that despite having plenty of time to correct the affidavit and refile in a timely manner, Kirk waited until December.
“[Kirk] also did not attempt to correct the alleged deficiencies in the affidavit within the prescribed time, even though [Kirk] had ample time to do so. [Kirk] had close to two months to add the information the recorder requested to the affidavit and this matter would have been resolved. Instead, [Kirk] waited approximately three months after the expiration of the 120 day time limit to file a corrected affidavit.”
File Documents Timely
If a document must be filed by a specific date, ensure the document is filed. In this case, that means you ensure the statutorily correct document is in the hands of the county recorder by the deadline. Don’t assume that dropping something in the mail means it will make it to its destination timely. Carefully track deadlines; if you receive returned mail, review it immediately and act where appropriate.