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Ohio’s updated Commercial Broker Lien Law now in effect

By Peg Ritenour, OAR Vice President of Legal Services/Administration

The amendments to Ohio’s Commercial Broker Lien Law that were passed by the Ohio Legislature late last year officially became effective on March 23rd.

The purpose of this legislation — which was spearheaded by the Ohio Association of REALTORS — was to modernize the lien rights that are designed to protect  the commissions earned by commercial real estate brokers. These new provisions broaden the ability of  OAR’s commercial members to file a lien when necessary and were the result of a special OAR working group chaired by OAR Past President Joseph P. Ditchman, Jr.

Below are changes to  the commercial lien law that became effective last week:

  1. Sales Transactions — Commissions Paid by the Buyer: Brokers will now be able to file a lien on a property after closing if the buyer was required to  pay the broker a commission in a sales transaction. In this case the broker must file the lien within 90 days of the closing. (The previous  law only allowed a broker who was to be paid by the seller to file a lien. The law continues to permit this, however if the lien is based on non-payment by the seller, it must be filed before closing)
  2. Lease Transactions — Filing Lien Affidavit for Initial Lease, Lease Renewal or Expansion of the Leased Space: The new amendments expand the time frame for when a broker can file a lien for unpaid  fees owed on commercial real estate leases. Under the new provisions, a broker who is owed fees by an owner can now file the lien affidavit within 90 days of a default by the owner for non- payment of fees due under a written contract with a broker for services related to leasing commercial real estate. ( Prior to this amendment the lien affidavit had to be filed within 30 days after the first rental payment was due unless the broker was notified of the date of the lease signing and then it had to be filed prior to that date. This prohibited the use of  the lien for nonpayment on renewals, expansions, etc.)
  3. Leasing Commission Paid in Installments: Under the new provisions when a landlord is paying a leasing commission in installments, a lien affidavit can now be filed upon default  by the landlord of a commission due on any installment.  The lien must be filed within 90 days of the default and must be for the amount of any installment payment past due under a written contract with a broker for services related to leasing commercial real estate. (Due to the filing deadlines in the old version of the lien law, brokers could only file a lien on the amount of the first installment. No lien right was provided for subsequent payments.)
  4. Timeframe to Initiate the Common Pleas Court Proceeding to Enforce the Lien: The time limit  to file an action to enforce a broker’s lien was extended to  two years from the date of filing the lien affidavit. (The law previously required this to be action be commenced within one year of filing the lien affidavit.)

Please note: Brokers should consult with their own attorney prior to filing a lien as there are strict requirements that if not met, could result in damages against the broker.

Tags: Commercial, legal, politics