Mechanic's Liens in the Cloud
According to a recent settlement, companies that offer cloud-based software to assist contractors and material suppliers to preserve and track mechanic’s lien rights can continue to do business in Ohio with certain restrictions to avoid the unauthorized practice of law.
Similar to LegalZoom.com, which makes available legal forms for the general public, a New Orleans based company, Express Lien, Inc. d/b/a zlien, provides software that allows its customers to complete forms creating mechanic’s lien notices and affidavits to file in Ohio.
The Cleveland Metropolitan Bar Association filed a complaint before the Ohio Supreme Court’s Board on the Unauthorized Practice of Law alleging that Express Lien was performing legal services in Ohio through the attempted filing of mechanic’s liens on behalf of contractors, and interpreting and advising clients on Ohio-specific law.
The principals of zlien were not licensed to practice law in Ohio. On one occasion an employee of zlien signed an affidavit of mechanic’s lien as the “authorized and disclosed agent for” the lien claimant. zlien responded that it does not prepare the lien documents, but instead “acts as a technology powered scrivener, and merely copies verbatim the user provided information.”
The Bar Association and Express Lien entered into a settlement agreement which was approved by the Board on the Unauthorized Practice of Law. The claim against Express Lien was dismissed as part of the settlement. In approving the settlement, the Board noted that the practice of law includes the preparation of legal documents and contracts by which legal rights are preserved. In addition, the use of a power of attorney does not give a person who is not licensed the right to practice law on behalf of another person.
In the settlement agreement, zlien agreed, without an admission of any wrongdoing, that it will not sign any mechanic’s lien affidavits for properties located in Ohio unless it is the lien claimant for the particular lien or is licensed to practice law in Ohio. zlien can continue to provide software that allows customers to complete forms creating mechanic’s lien affidavits to file in Ohio, but the forms must comply with Ohio’s Mechanic’s Lien law, and zlien cannot select the property descriptions to be included with the affidavits or advise customers which property descriptions to use.
This is not the first time the issue has arisen. Back in 2010, the Ohio Supreme Court approved a consent decree that stated a non-lawyer preparing, signing and pursuing affidavits of mechanic’s liens for third-parties in Ohio is the unauthorized practice of law.
If you are performing construction work in Ohio and are seeking to protect your right to contract payments, you should consider seeking the proper legal advice on how to proceed with asserting lien and bond rights.
For more information, contact Pat Devine
or a member of our Construction law
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.