Lawmakers approve updates to Ohio’s Commerical Broker Lien Law
By Scott Williams, OAR Director of Governmental Affairs
The Ohio Association of REALTORS was successful in spearheading passage of major updates to the state’s Commercial Broker Lien Law during the final days of the 129th General Assembly.
The changes, which modernize the law that the industry initially played a role in adopting in 1997, are designed to better reflect the practice of commercial real estate in today’s marketplace and make its provisions more applicable and meaningful for the profession. The revisions are part of House Bill 510, a bill dealing with changes in the manner that state chartered banks are taxed, which passed the Ohio Senate last week and the House concurred yesterday. Gov. Kasich is expected to sign the legislation, which will into effect in Spring 2013.
OAR Past President Joseph P. Ditchman, Jr. chaired a special OAR Working Group that was created in 2011 to review Ohio’s Commercial Broker Lien Law at the request of the Commercial Real Estate Council of Cincinnati. The group identified four changes that were part of the package lawmakers passed:
- Sales Transactions — Commissions Paid by the Buyer: If the buyer is to pay commission in a sales transaction, the broker must file the lien within 90 days of the closing. (The law did not provide a broker who was to be paid by the buyer the right to file a lien, as any lien filed in a sales transaction must be filed prior to closing.)
- Lease Transactions — Filing Lien Affidavit for Initial Lease, Lease Renewal or Expansion of the Leased Space: The broker must file the lien affidavit in the County Recorder’s office within 90 days of a default by the owner in the payment of fees due under a written contract with a broker for services related to leasing commercial real estate. (Ohio law currently provides that the lien affidavit be filed within 30 days after the first rental payment is due unless the broker is notified of the date of the lease signing and then prior to that date.)
- Leasing Commission Paid in Installments: When the landlord is paying a leasing commission in installments, a lien affidavit may be filed in the amount of any installment payment due within 90 days of a default by the landlord in the payment of fees due under a written contract with a broker for services related to leasing commercial real estate. (Due to the timing of filing the lien affidavit, Ohio law would limit the lien to the amount of the first installment. No lien right was provided for subsequent payments.)
- Timeframe to Initiate the Common Pleas Court Proceeding to Enforce the Lien: An action to enforce a broker’s lien must be commenced within two years of filing the lien affidavit. (Current Ohio law provides that the action be commenced within one year of filing the lien affidavit.)
“Ohio’s Commercial Broker Lien Law has been an important tool for the industry, as it has given our commercial brokers recourse for payment that is owed,” Ditchman said. “The updates we’ve been able to secure will strengthen the lien law that has served us well for the past 15 years.”
For more information on the existing lien law, click here.