Court Holds Notice of Commencement Must Be in Substantial Compliance

Kegler Brown Construction Newsletter

What should a subcontractor or material supplier do when the notice of commencement is deficient and contains incorrect information? According to one appellate court, the subcontractor must still follow all the statutory requirements and file a notice of furnishing in order to preserve lien rights.

In Linworth Lumber Co. v. Z.L.H. Ltd. et al, the notice of commencement contained incorrect information for several of the mandatory requirements. The subcontractor asserted that a faulty notice of commencement excused the requirement for filing a notice of furnishing. The court of appeals disagreed. The court reviewed the mechanics' lien statute and found the notice of commencement requirements outlined in O.R.C. 1311.04 are ambiguous. One section (1311.04(A)) requires the notice of commencement to be "substantially the form specified" in contrast to the strict compliance language of the very next section (1311.04(B)) which mandates that the notice of commencement "shall contain" the twelve statutory requirements.

The court concluded that a notice of commencement must only be in substantial (not strict) compliance. In evaluating the inconsistency in the statute, the court indicated that "the overriding purpose ... is to put subcontractors or materialmen on notice of who the owner is and where the construction work is to be done." According to the court, because changes to the notice of commencement do not effect the effective date of the notice of commencement then incorrect information must not invalidate it either. Therefore, the court found the notice of commencement "fulfilled the necessary requirements for recording and put subcontractors or materialmen on notice the information pertaining to the real property which was necessary for the preparation of the notice of furnishing."

This case gives owners who make certain mistakes in the notice of commencement a break. A subcontractor facing this situation should still file a notice of furnishing because section 1311.04(C) gives lien claimants the opportunity to correct a lien containing wrong information obtained from a faulty notice of commencement and maintain a damage claim against the owner.