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In this blog presented by SunRay Construction Solutions and Jake Blake, Partner Calfee, Halter & Griswold LLP, we will break down the essential steps you need to take to streamline the payment process and protect your interests in Ohio's construction industry.
Understanding Your Contract - Adding Prevailing Party Clauses
Imagine this scenario: you're knee-deep in a construction project or locked into a contractual agreement when unexpected issues arise – payment disputes, breaches of contract, you name it. Naturally, you ask yourself a crucial question: "Can I recover my attorney's fees?"
The answer lies within the contract itself. Without a clear provision outlining the recovery of attorney's fees in the event of a breach, you might find yourself at a loss, thanks to the American Rule – a legal principle dictating that each party bears its own attorney fees unless otherwise provided by statute or contract. To tip the scales in your favor, it's essential to understand the nuances of prevailing party clauses.
- These clauses come in two primary forms: unilateral and bilateral. A unilateral clause grants one party the right to seek attorney's fees upon prevailing in a dispute, while a bilateral clause extends this right to both parties.
- Navigating these provisions requires finesse. Explicitly stating that the provision was negotiated ensures its enforceability, shielding against potential legal challenges. This acknowledgment serves as a safeguard against claims of coercion or duress, thereby fortifying the clause's legitimacy.
Leveraging Your Position
The prevailing party provision not only secures your right to recover owed amounts but also covers expenses incurred in pursuing them. This added muscle can reshape dispute dynamics, compelling opponents to reassess their stance.
Even in seemingly minor disputes, this provision can be a game-changer, mitigating the risk of litigation costs outweighing the disputed amount and providing a viable path to resolution.
- In essence, the attorney's fees provision is a potent tool in your arsenal, empowering you to assert your rights with confidence. Understanding its nuances and negotiating strategically can safeguard your interests and mitigate risks in contractual agreements.
- So, the next time you find yourself drafting or reviewing a contract, remember the power of the attorney's fees provision – it could be your saving grace when things get rough.
- By strategically incorporating prevailing party clauses into your contracts, you can navigate Ohio's construction landscape with confidence, ensuring that your rights and interests remain protected every step of the way.
Securing Lien Rights in Ohio
Beyond the contracts lies a fundamental aspect that can safeguard your interests: securing lien rights. Lien rights serve as a critical tool in ensuring payment for your services and materials. However, navigating this terrain requires a meticulous approach. Let's look at the essential steps involved in securing and protecting your lien rights.
Step 1 - Thorough Contract Review
The journey to safeguarding your lien rights begins with a thorough examination of the contract. Contract provisions can significantly impact your ability to file liens on properties. Some clauses might even waive your lien rights, not only for work already performed and paid for but also for future work. Hence, it's imperative to scrutinize the contract meticulously to understand how these provisions may affect your rights and obligations.
Step 2 - Understanding the Basics of Notice of Furnishing
One crucial element in protecting your lien rights is the Notice of Furnishing. This notice serves as a way for suppliers and subcontractors to notify the owner of their involvement in the project. Even if you're not directly contracted with the owner, filing a Notice of Furnishing can help protect your rights. Ensuring compliance with statutory requirements, serve this notice within 21 days after commencing work on the project. Erring on the side of caution by filing this notice ensures that your involvement in the project is well-documented.
Step 3 - Filing the Mechanics' Lien
Filing a mechanics' lien is a pivotal step in securing your payment for work done. However, it's essential to follow the process meticulously. Mechanics' liens must be notarized and recorded in the county where the property is located. Failure to adhere to specific requirements outlined by each county could result in your lien being rejected or incurring additional fees. Always double-check the formatting requirements with the county recorder's office to avoid any setbacks.
Step 4 – Abiding to the Deadline
Timing plays a critical role in the mechanics' lien process. The deadline for filing a mechanics' lien varies depending on whether the project is commercial or residential and your tier in the contracting chain. Understanding what constitutes "work" is essential to ensure you meet the filing deadline. Adhere to the prescribed timelines for filing mechanics' liens, varying between 75 days for commercial projects and 60 days for residential projects from the date of last work.
Step 5 - Serving the Lien: Notifying the Right Parties
Once you've filed your mechanics' lien, it's crucial to serve it on the parties involved, including the property owner and anyone who owes you money for your services. This step not only fulfills legal requirements but also puts pressure on the responsible parties to address your payment promptly. Property owners are often motivated to resolve liens quickly to avoid potential legal complications.
Navigating Ohio’s Lien Law Timeline
Ohio’s lien law imposes a structured timeline for various lien-related actions, encompassing:
Notice of Commencement: Filed at the project's inception, with the owner obligated to provide the notice within 10 days if requested.
Notice to Commence Suit: A prerequisite for initiating legal action, with a 60-day timeframe for filing a lawsuit following its service.
Affidavit of Release: File within 30 days post-satisfaction or adjudication of the lien.
Lien Law Traps to Avoid in Ohio
Let's explore some common traps to avoid and expert tips to ensure your lien rights remain safeguarded.
1. Renewing the Contract: Don't Wait on Lien Rights
Renewing a contract may seem routine, but it can inadvertently impact your lien rights. Ensure that the contract does not contain provisions that compromise your ability to exercise lien rights. Waiting on this crucial step has led to unfortunate consequences in the past, emphasizing the importance of thorough contract review before proceeding.
2. Seek Legal Aid: Don't Evaluate Alone
When it comes to understanding the intricacies of lien rights, don't take chances. Consulting with a knowledgeable lawyer can provide invaluable guidance, especially regarding privity issues. Even if you lack a direct contract relationship with the owner, serving a Notice of Furnishing is a simple yet effective measure to protect your rights.
3. Timing Clarifications: Understanding the Last Work Date
Determining the date of last work or furnishing materials can be tricky, but it's essential for meeting filing deadlines. While warranty work doesn't reset the clock, punch list items may count depending on contractual specifications. Avoid the risk of missing deadlines by filing your lien well before the last day and paying attention to lien waivers and payment applications.
4. Beware of Broad Waivers: Understand Your Rights
Be cautious when signing lien waivers, as they may unintentionally waive more rights than intended. Statutory schemes governing lien rights may seem complicated due to numerous details and potential pitfalls. While online resources can be helpful, exercise discretion and verify information with reputable sources.
5. Utilize Reliable Resources: Franklin County Law Library
For those seeking reliable templates and guidance for lien-related forms, the Franklin County Law Library offers an invaluable resource. Access examples of essential forms, such as mechanics' lien affidavits, and ensure compliance with legal requirements. Avoid the risk of submitting incorrect or invalid liens by utilizing these resources for accurate documentation.
6. Communicate with Stakeholders: Utilize Local Resources
In case of non-payment, communication with the property owner can often resolve issues amicably. Your local county recorder's office serves as a valuable resource for filing mechanics' liens correctly. Remember to record your lien in the county where the project is located to assert your rights effectively.
Key Takeaways
- Know Your Rights:
Understanding Ohio's lien laws and regulations is crucial for protecting your right to payment. Familiarize yourself with deadlines, notice requirements, and other legal provisions that govern the payment process.
- Document Everything:
Clear and comprehensive documentation is your best defense in case of payment disputes. Keep detailed records of contracts, invoices, change orders, and correspondence to support your claims for payment.
- File Preliminary Notices:
As a subcontractor or supplier, filing preliminary notices can help secure your right to payment and preserve your lien rights. Be sure to adhere to the strict timelines and requirements outlined in Ohio law.
- Communicate Effectively:
Open and transparent communication with all parties involved in the project is essential for resolving payment issues promptly. Address any concerns or discrepancies as soon as they arise to prevent escalation.
- Consider Alternative Dispute Resolution:
In cases where payment disputes cannot be resolved amicably, consider alternative dispute resolution methods such as mediation or arbitration. These approaches can often provide faster and more cost-effective resolution than litigation.
- Seek Legal Assistance When Necessary:
If you encounter complex legal issues or face resistance in obtaining payment, don't hesitate to seek guidance from a qualified construction law attorney. They can provide valuable advice and representation to help protect your rights and interests.
- Stay Informed and Proactive:
Keep yourself updated on changes to Ohio's construction laws and regulations to ensure compliance and mitigate potential risks. By staying proactive and informed, you can minimize payment delays and maximize your chances of getting paid on time.
If you find yourself in a situation where you need assistance to get paid in Ohio, then ensure that you get in touch with SunRay’s experts well in advance, so that they can take all the required steps promptly. Call 800-403-7660 today and get paid what you deserve!
