Mechanic’s lien surety found to have waived notice of furnishing requirement.

Bonding off a mechanic’s lien in Ohio is a statutory procedure performed by a construction attorney who is usually retained by either the project’s owner, general contractor, or mid-tier subcontractor.  Ohio Revised Code § 1311 contains the bonding off procedure and provides that before or after suit has been commenced upon a mechanic’s lien a bond may be provided and if approved by the court then (i) the bond is substituted for the security of the lien, (ii) the lien is rendered void, and (iii) the property is discharged from the lien.  If the claimant enforces its lien, then a surety on the bond may be liable for the lien claim.

In the enforcement action following bonding off the mechanic’s lien, the bond surety must defend itself.  The surety’s obligation to defend itself came into play in Broadway Concrete Investments LLC v. Masonry Contracting Corporation, 2022-Ohio-530 (8th Dist. 2022).  There Western Surety was the surety on the bond.

The appellate court noted the background principles that when a mechanic’s lien is bonded off, “the bond serves as a substitute for the lien and is based upon the prior existence of the lien.  Therefore, a valid claim cannot be brought against a bond unless there is a valid existing mechanic’s lien.”  Further, depending on the specific facts of the project, one of the statutory requirements to establish a valid lien can be serving a notice of furnishing.

After Western Surety had been found liable, Western Surety argued on appeal that the lien claimant had failed to establish at trial that it timely served a notice of furnishing, therefore, failed to establish its lien was valid.  The appellate court, however, found the surety had waived the notice of furnishing requirement as a defense.  The court stated that failure to timely serve a notice of furnishing is an affirmative defense to a mechanic’s lien.  Affirmative defenses may be deemed waived if not properly raised by the defendant.  The appellate court determined that Western Surety had not raised the affirmative defense in its answer or during trial.  As a result, the surety was found to have waived its notice of furnishing defense and could not assert a lack of notice of furnishing as grounds to avoid liability.

Nick Schwandner is an Ohio construction attorney.  He regularly bonds off mechanic’s liens and litigates mechanic’s lien claims across Ohio.  Schwandner Law Firm’s sole practice area is construction law.