Don’t Forget to Serve Your Notice of Furnishing
Kegler Brown Construction Newsletter February 1, 1998
Don't count on being able to point the finger at the owner's slightly defective notice of commencement ("NOC") in order to wiggle your way out of having to serve the owner with a notice of furnishing ("NOF"). The Franklin County Court of Common Pleas in two recently reported decisions, Jim Morgan Elec. Co. v. Smith (Sept. 19, 1996, Franklin Co. C.P.), 85 Ohio Misc.2d 45 and Jim Morgan Elec. Co. v. Smith (Dec. 10, 1996, Franklin Co. C.P.), 85 Ohio Misc.2d 53, has closed some of the loopholes subcontractors have attempted to fall back on when they forgot to properly serve their NOFs.
In Jim Morgan, the owner filed a NOC but forgot to include the date of contract with the original contractor (which is a minor defect). The sub did not serve a NOF until 48 days after the last day of work (the same day he filed his lien). The sub then initiated a foreclosure action asserting that his duty to serve a NOF was relieved for two reasons: (1) the NOC was defective because it didn¹t include the date of contract and (2) the NOC was not posted at the job site.
Judge Travis held that the owner "substantially" complied with §1311.04 and that the failure to include the contract date did not cause the sub any "inconvenience, prejudice, loss, or inability to serve its notice of furnishing in a timely manner." The court further held with respect to the posting issue, that the sub's duty in regard to serving a NOF is dependent upon an owner's "filing" a NOC, not posting it. As such, the owner's failure to post a NOC at the job site will not excuse a sub from having to serve a NOF.
In denying Jim Morgan's motion for reconsideration, Judge Travis added to his previous decision by pointing out that the sub made no effort to determine if a NOC was filed at the recorder's office until after he completed his work and was preparing to file a mechanic's lien. In light of this, Travis gave little weight to the sub's technical arguments with respect to the NOC because the sub obviously didn't lose his lien rights as a result of relying upon defective information in the NOC. In fact, the defect was discovered by the sub well after the time had expired for him to serve his NOF. Travis went on to state that §1311.04(C) "provides that a lienholder's remedies should it discover that a notice of commencement contains incorrect information are available only if the loss and expenses incurred are a direct result of the lien claimant's reliance on the incorrect information."
Don't fall into the trap of having to look for ways to get excused from having to serve your NOFs. Forgetting about the NOF in the first place usually will lead to the loss of your mechanic's lien rights. To avoid this problem, establish a program at your company where serving the NOF becomes a part of the construction process like getting your subcontract signed. Remember, for best results, your notice of furnishing should be served within 21 days of your first date of work on the project.