Ohio § 1311.011

§ 1311.011.

(A) As used in this section: (1) “ Home construction contract ” means a contract entered into between an original contractor and an owner, part

owner, or lessee for the improvement of any single- or double-family dwelling or portion

of the dwelling or a residential unit of any condominium property that has been submitted

to the provisions of Chapter 5311. of the Revised Code;  an addition to any land;

 or the improvement of driveways, sidewalks, swimming pools, porches, garages, carports,

landscaping, fences, fallout shelters, siding, roofing, storm windows, awnings, and

other improvements that are adjacent to single- or double-family dwellings or upon

lands that are adjacent to single- or double-family dwellings or residential units

of condominium property, if the dwelling, residential unit of condominium property,

or land is used or is intended to be used as a personal residence by the owner, part

owner, or lessee. (2) “ Home purchase contract ” means a contract for the purchase of any single- or double-family dwelling or residential

unit of a condominium property that has been subjected to the provisions of Chapter

5311. of the Revised Code if the purchaser uses or intends to use the dwelling, a

unit of a double dwelling, or the condominium unit as the purchaser's personal residence. (3) “ Lending institution ” means any person that enters into a contract with the owner, part owner, purchaser,

or lessee to provide financing for a home construction contract or a home purchase

contract, which financing is secured, in whole or in part, by a mortgage on the real

estate upon which the improvements contemplated by the home construction contract

are to be made or upon the property that is the subject of the home purchase contract,

and that makes direct disbursements under the contract to any original contractor

or the owner, part owner, purchaser, or lessee. (4) “ Original contractor ” includes any person with whom the owner, part owner, lessee, or purchaser under

a home purchase contract or a home construction contract has directly contracted. (B) Notwithstanding sections 1311.02 to 1311.22 of the Revised Code , all liens, except mortgage liens, that secure payment for labor or work performed

or materials furnished in connection with a home construction contract or in connection

with a dwelling or residential unit of condominium property, that is the subject of

a home purchase contract are subject to the following conditions: (1) No original contractor, subcontractor, material supplier, or laborer has a lien to

secure payment for labor or work performed or materials furnished by the contractor,

subcontractor, material supplier, or laborer, in connection with a home construction

contract between the original contractor and the owner, part owner, or lessee or in

connection with a dwelling or residential unit of condominium property, that is the

subject of a home purchase contract, if the owner, part owner, or lessee paid the

original contractor in full or if the purchaser has paid in full for the amount of

the home construction or home purchase contract price, and the payment was made prior

to the owner's, part owner's, or lessee's receipt of a copy of an affidavit of mechanics'

lien pursuant to section 1311.07 of the Revised Code . An owner, part owner, or lessee may file with the county recorder of the county in

which the property that is the subject of a home construction contract or a home purchase

contract is situated an affidavit that the owner, part owner, or lessee has made payment

in accordance with this division.  Except if the owner, part owner, or lessee is guilty of fraud, any lien perfected

on the property by any subcontractor, material supplier, or laborer for labor or work

performed or for materials furnished is void and the property wholly discharged from

the lien, if the lien was perfected after full payment was made in accordance with

this division.  The recorder shall index and record the affidavit in the same manner that releases

of mortgages and other liens are indexed and recorded, and shall receive the same

fees for indexing and recording the affidavit that are provided for the recording

of leases. Nothing in this section shall adversely affect a mechanics' lien claimed against a

prior owner if the lien is perfected prior to a conveyance under a home purchase contract. (2) If the original contractor has not been paid in full as provided in division (B)(1)

of this section, no subcontractor, material supplier, or laborer has a lien to secure

payment for labor or work performed or materials furnished by the subcontractor, material

supplier, or laborer for an amount greater than the amount due under the home construction

contract that has not been paid to the original contractor for the work, labor, or

materials or for an amount greater than the amount of the home purchase contract price

that has not been paid to the original contractor.  The total amount of all liens for labor or work performed or for materials furnished

in connection with a home construction contract that may be enforced in lien foreclosure

proceedings shall not exceed the amount due under the home construction contract that

has not been paid to the original contractor or the amount due under the home purchase

contract that has not been paid to the original contractor. If the amount due under the home construction contract or under the home purchase

contract to the original contractor is insufficient to secure the mechanics' liens

of all lien claimants that arose out of the home construction contract or that arose

out of a contract in connection with a dwelling or residential unit of condominium

property, that is the subject of a home purchase contract, each mechanics' lien shall

be secured by a pro rata share of the amount due to the original contractor, except

that mechanics' liens filed by laborers have priority.  The pro rata share shall be equal to the monetary amount of the amount due to the

original contractor that is subject to all valid mechanics' liens on the property

that is the subject of the home purchase contract or all valid mechanics' liens under

the home construction contract multiplied by a fraction in which the denominator is

the total monetary amount of all valid mechanics' liens on the property that is the

subject of the home purchase contract or of all valid mechanics' liens that arose

out of the home construction contract, and the numerator is the amount claimed to

be due by the lien claimant under a contract in connection with a dwelling or residential

unit of condominium property, that is the subject of the home purchase contract or

under the home construction contract. For the purpose of this section, the amount due under a home construction contract

or a home purchase contract is the unpaid balance under the home construction contract

or the home purchase contract, minus the cost to complete the contract according to

its terms and conditions, including any warranty or repair work. (3) If, after receiving written notice from an owner, part owner, purchaser, or lessee

that full payment has been made by the owner, part owner, purchaser, or lessee to

the original contractor for the amount of the home construction or home purchase contract

and that payment was made prior to the owner's, part owner's, or lessee's receipt

of a copy of an affidavit of mechanics' lien pursuant to section 1311.07 of the Revised Code , the lienholder fails within thirty days after receipt of the notice to cause the

lien securing payment for the work, labor, or materials to be released of record,

the lienholder is liable to the owner, part owner, or lessee for all damages arising

from the lienholder's failure to cause the lien to be released.  Damages shall include, but are not limited to, court costs and reasonable attorney

fees incurred during any litigation between the owner and a lien claimant or lien

claimants who have refused to release their liens after receiving a copy of the affidavit

referred to in division (B)(1) of this section, or evidence that the cost of completing

a home construction contract exceeded, or is reasonably expected to exceed, the balance

due the original contractor under the home construction contract as provided in division

(B)(2) of this section. (4) No lending institution shall make any payment to any original contractor until the

original contractor has given the lending institution the original contractor's affidavit

stating: (a) That the original contractor has paid in full for all labor and work performed and

for all materials furnished by the original contractor and all subcontractors, material

suppliers, and laborers prior to the date of the closing of the purchase or during

and prior to the payment period, except such unpaid claims as the original contractor

specifically sets forth and identifies both by claimant and by amount claimed; (b) That no claims exist other than those claims set forth and identified in the affidavit

required by division (B)(4) of this section. (5) When making any payment under the home construction contract or on behalf of the

owner or part owner under a home purchase contract, the lending institution may accept

the affidavit of the original contractor required by division (B)(4) of this section

and act in reliance upon it, unless it appears to be fraudulent on its face.  The lending institution is not financially liable to the owner, part owner, purchaser,

lessee, or any other person for any payments, except for gross negligence or fraud

committed by the lending institution in making any payment to the original contractor. After receipt of a written notice of a claim of a right to a mechanic's lien by a

lending institution, failure of the lending institution to obtain a lien release from

the subcontractor, material supplier, or laborer who serves notice of such claim is

prima-facie evidence of gross negligence. (6) Any owner, part owner, purchaser, or lessee, who requests an original contractor

to supply the affidavit required by division (B)(4) of this section, may withhold

any payment that is due under the home construction contract or under the home purchase

contract until the original contractor provides the owner, part owner, purchaser,

or lessee with the affidavit.  The owner's, part owner's, purchaser's, or lessee's remedies and rights under this

section shall not be prejudiced by the owner's, part owner's, purchaser's, or lessee's

failure to request or to obtain the affidavit provided for in division (B)(4) of this

section. (7) An owner, part owner, purchaser, lessee, or lending institution may make payment

jointly to the original contractor and to a subcontractor, material supplier, or laborer

as a condition to their giving lien releases. (8) If a subcontractor, material supplier, or laborer refuses to supply a lien release

to the original contractor, owner, part owner, lessee, or lending institution because

the amount of money that the original contractor owes the subcontractor, material

supplier, or laborer is in dispute, the owner, part owner, lessee, and lending institution

shall withhold from payment to the original contractor an amount of money equal to

the amount of money claimed by the subcontractor, material supplier, or laborer.  If a subcontractor, material supplier, or laborer refuses within ten days after

receipt of a written request from either the original contractor or the lending institution

to state the amount due and the last date that the lien claimant performed any labor

or work or furnished any material in furtherance of the improvement which gives rise

to the lien claimant's lien claim, the amount and the last date shall be stated by

the original contractor.  The owner, part owner, lessee, and lending institution shall pay the withheld amount

of money to the original contractor when any of the following occur: (a) The subcontractor, material supplier, or laborer gives written notice to the owner,

part owner, lessee, or lending institution that the amount of money claimed to be

due has been paid. (b) The subcontractor, material supplier, or laborer delivers a lien release to the original

contractor, owner, part owner, lessee, or lending institution. (c) The original contractor provides the subcontractor, material supplier, or laborer

with a bond, in a form that is satisfactory to the owner, part owner, lessee, or lending

institution and in an amount equal to the amount of money claimed to be due. (d) The time for filing a lien by the subcontractor, material supplier, or laborer has

expired and no affidavit of lien has been recorded pursuant to section 1311.06 of the Revised Code . (9) Any lien release given pursuant to this section is valid and enforceable without

separate consideration for the release.