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Payment Assurance (Lien) Legislation Becomes Law

07/21/2021

Payment Assurance (Lien) Legislation Becomes Law

Dewine bill signingACEC Ohio worked with AIA to pass Senate Bill 49, sponsored by Senator Jay Hottinger (Newark) and Senator Vernon Sykes (Akron).  The bill was signed into law by Governor Mike DeWine on July 1.

Senate Bill 49 specifically creates the right to file a lien affidavit against the real estate for licensed design professionals including Architects, Landscape Architects, Engineers, and Surveyors. Because the law requires a written contract with a person owning an interest in commercial real estate, privity of contract exists, and no “leap-frog” right is required. Ohio is one of the last states nationwide to take this historic step.

Patterned after the Broker’s Lien Law, Revised Code 1311.85 et seq., Senate Bill 49 simplifies the lien process, with statutory language located in the licensure chapters of the affected professions.

The “lien” is created automatically when any licensed design professional “enters into a written contract for services to be provided with regard to any interest in commercial real estate”. Only the design professional named in the contract has the lien rights; no employee, agent, or independent contractor or subcontractor of the design professional can claim the lien, as without contract privity.

The lien is not available for public or residential real estate projects. It only covers amounts due under the written contract, signed by the owner of the real estate interest. An “interest” includes a leasehold but is limited to that tenant’s rights of use.

The legislation for Ohio Design Professionals finally provides the opportunity to secure payment for design work, other than with a traditional mechanics’ lien. The process is simplified and creates leverage for collecting unpaid work.

The Payment Assurance Legislation takes effect on September 30, 2021. For a detailed analysis of the bill, please click here.

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