Tough economic times weighing heavily on the automotive industry, and resulting in bankruptcy filings of Tier 1 suppliers are also negatively impacting mold manufacturers. Mold lien laws are taking a front row seat with the AMBA as it works with members and chapters to help restructure current laws in the various states. On Jan. 27, in a webinar produced by the AMBA and David S. Lefere, an attorney with Bolhouse, Vander Hulst, Risko & Baar, P.C. in Grandville, MI drew 35 attendees. Lefere works with tool, die, and mold manufacturers in Michigan on issues related to Mold Lien laws.
There are different types of mold lien laws in each state. In the 1990s, the Society of the Plastics Industry got mold lien laws passed in about 38 states, but these are “possessory” lien laws, which require possession of the mold to enforce the law. Those laws aren’t always helpful to the mold manufacturers, who often ship the mold prior to final payment, and don’t retain possession.
True mold builder lien laws require a non-possessory stipulation, such as Michigan’s non-possessory mold lien law. Illinois and Ohio also have non-possessory mold lien laws, which are the only states which have these types of mold lien laws on the books. “The absolute most important and effective lien law in place today is the non-possessory mold builder lien law that exists in Michigan, Ohio, and Illinois, which are the only ones in the U.S.,” Lefere stated. “All the other mold lien laws are only in force when you have possession.”
Mold manufacturers located in these states need to take advantage of these laws, especially in these economic times, Lefere encouraged. “Ohio has the most effective lien law of any state in the U.S. The Illinois law is a Tool Lien. Illinois does not have a mold lien law per say, but a special tool lien law, which can be morphed into a mold lien. Michigan has a special tool and a mold lien law,” he added. “Ohio’s Mold Lien Law is the most effective of them all. Don’t recreate the wheel but use Ohio’s law for your state.”
He also noted that an older law, the Molder Disposition Law, is linked to the Molder Lien Laws and is the oldest of the laws. “If you’re in possession of a mold, and the mold is expired, has not been run in a specified period, and you a have possession of it you can dispose of it,” Lefere said.
These non-possessory Mold Lien laws are most effective in cases of a long-standing lack of payment when the mold builder no longer has the mold. “[Mold builders] finance the capital, build the mold, and ship the mold without final payment. Without a non-possessory law [mold builders] ship the mold with no recourse,” Lefere explained. With a non-possessory Mold Lien Law, mold builders can collect even if they don’t have possession of the mold, even in cases of bankruptcy or the molder or OEM going out of business.”
Currently, Lefere is working with the AMBA’s Michigan Chapters to amend the Michigan Mold Lien Act to be even more “mold builder friendly.” The amendment will eliminate the permanent recording requirement from the Mold Lien Act. Lefere said that one problem with mold builders putting an engraved plate on the molds they build is that in many cases, the OEM or the molder will remove the plate, or deface the engraving on the mold so that the true owner of the mold, in cases of non-payment, cannot be determined. Lefere encouraged all mold builders to “implement procedures within their shops to make sure the identifying information is properly recorded on all tooling and they retain some form of photographic evidence of the recording.”
Lefere stated that “photographs are necessary because subsequent possessors of the tooling often claim that the recording is not on the tooling. Once the tool and die company delivers tooling it is regularly in the possession of multiple companies and can be easily modified. There have been numerous instances when a tool and die company has sought to enforce a lien under the Mold Lien Acts only to find out that the recording on the tooling had been removed by a subsequent party.” For more information on Mold Lien Laws or to get a copy of Ohio’s law, contact the AMBA office at 1-847-222-9402 or visit their website.—[email protected]