Molder’s Lien Provides Tool to Collect Debt

(Originally published in The Business Journal)

If you are in a business that either makes tooling and molds, or manufactures products for a customer using tooling and molds, Ohio law gives you special protection to make sure you get paid for your efforts.

Commonly known as the “molder’s lien law,” this little known yet extremely effective law can give your company a powerful tool for getting paid.

Under that law, two classes of providers are protected. A “molder” includes any person or company that either fabricates, casts or otherwise makes or improves a die, mold, pattern, form or tooling to produce plastic, metal, paper, china, ceramic, glass or rubber products or a person or company that uses that die, mold, pattern or tooling to make the products just defined. 

The second category under the law is known as a “mold builder.”  Mold builders are specifically limited to those who make tooling molds or dies for the plastic industry or metal forming industry. This category is as not as broad as the molder category.

Usually, molders work on or with tooling, dies or molds that belong to a customer.  So long as the molder retains possession of the die or tooling, he has a lien on the die or tooling for not only the amount due for any work in manufacturing, improving or repairing the tooling or molding, but for any work done with the tooling or molding, including manufacturing products with it for the customer.

If the customer does not pay the molder for any charges associated with manufacturing, repairing or improving the tooling or any charges associated with making something with the tooling, a molder’s lien allows the molder to retain possession of the tooling until he is paid.

Moreover, if payment is not forthcoming, the law permits the molder, after appropriate notice to his customer, to offer the mold or tooling for sale and to apply the proceeds to the debt owed. 

This can be a very powerful tool for payment, since most customers’ tooling is unique to their products and they would not want it to fall into the hands of a competitor. While the molder’s lien law requires no special filings or steps in order to make it effective, it is effective only so long as the molder retains possession of the tooling.

In contrast, the mold builder’s lien applies to those who manufacture or improve molds or tooling and is further limited to the metal-forming and plastics industries.  However, the mold builder’s lien will continue to be a lien on the tooling or mold, even after it leaves the possession of the mold builder, so long as the mold builder files appropriate notice with the Secretary of State. 

Once that notice is filed, the lien continues to be a charge against the tooling or mold for all amounts due the mold builder until he is paid in full.  The mold builder’s lien can be enforced like any other security interest in property.

One final distinction between the molder’s lien and the mold builder’s lien is important to note.  Under the statute, the molder’s lien takes priority over all pre-existing liens on the mold.

The mold builder’s lien, on the other hand, is subject to any pre-existing liens on the mold, including other molder’s liens and other mold builder’s liens. 

Thus, because of its broader scope and its ability to take priority over pre-existing liens, the molder’s lien is the more powerful weapon for getting paid.

Coombs can be reached at fcoombs@hhmlaw.com or at (330) 744-1111.