Episode Transcript
Speaker 1 00:00:12 Welcome to the podcast. We'll talk about everything related to contractors, construction and information to help you run better businesses. Hi guys, and welcome back to the quick getting screwed podcast. And today we're going to cover another state on the 50 state lien laws and how to file lien properly. Uh, and today we are talking about Ohio and I have an Ohio construction attorney on with me. We're going to go into all things, bond claims, liens, all the good things that you need to know as easy as possible, the filing in Ohio. So good morning, Andrew, how are you?
Speaker 2 00:00:51 I am great. Thanks for having me on.
Speaker 1 00:00:54 Thanks for being here. This is Andrew goodies that a construction attorney in Ohio. We'll put all his contact information in the show notes. If you want to reach out to him directly, if you have an issue in Ohio, but Andrew, tell us a little bit about yourself and how you became a construction attorney,
Speaker 2 00:01:08 Long story short, you know, as an attorney, sometimes don't get to pick and choose the areas that you practice. And I was fortunate enough to have a few good mentors, young, that focused on construction law. And I kind of segwayed into that. Uh, I also have some family members that practice, uh, in construction, both general contractor and an excavator. They've been doing it for 40 years. So between discussing their issues and problems, uh, once it became a lawyer and then having the mentors, it kind of segwayed into me, just focusing in on that and helping out, uh, you know, anybody that's really in the trades or GCs or owners and developers.
Speaker 1 00:01:47 Cool, because I really think personally that it's hard to come. As I know this from trying to train lawyers that had no experience in construction that really takes a special background. And just, what are your observation with judges and construction? Do you find the judges are familiar with the situation or
Speaker 2 00:02:05 My experience? Most judges are not, uh, there are select judges more so federal court judges that, um, really undertake and handle, uh, the construction cases. I think it's because their, their past is really, uh, opened doors to them, but understanding the concepts, but much like any other complex area, it's just something that most judges can't grasp. And so it deals with a lot of handholding moving forward, which ultimately does push people to try to get mediators or go into arbitration to get specialized attorneys that understand the concept and understand the issues and problems. But, you know, overall, that's just one of the issues that we have to deal with moving forward.
Speaker 1 00:02:51 Yeah. You got to teach them that industry and then teach them the law about the industry. And I find that, you know, because especially when I was first starting out, just like judges, know everything, they should already know all this, how construction works and they have no idea. And so, you know, I agree with you that arbitration is a good place that you can, you know, get somebody that's familiar with construction. So you have that baseline and you can get it done at least here a hell of lot faster than going to court.
Speaker 2 00:03:18 Right, right. You're, you're spot on with that. And most of the time, you know, whether it's selecting a single arbitrator or, you know, a panel through the AAA, uh, most of the time those arbitrators are experienced construction lawyers that have been doing it for 30 plus years and they've kind of hung up their private practice and that's what they're doing full time. So they've seen it all. They've, they've dealt with it all. Um, and it does give an advantage to both parties and either try to push it towards a resolution, um, or have a fair arbitration between the parties. And if it's it's much quicker, you know, we can argue all day about the cost of it, but at the end of the day, uh, if you can get it expedited, the issues resolved quicker than that's a benefit to every
Speaker 1 00:04:02 Yeah. And I know from my experience that costs more upfront, but the time you save, like in discovery disputes, all of that protracted litigation that in courtroom, you, he has to cost more, but in the long run, your client saves money and you get it decided, which is such a breath breath of fresh air comparative. At least the courts here, we were backed up by Harvey and then COVID hit. And so we are, it's hard to get a decision to.
Speaker 2 00:04:25 Yeah. Yeah. That's, I mean, in Ohio, we're looking at, um, you know, for, for civil cases, you know, courts are pushing them out again another year, at least. Um, I've had, I was supposed to have an arbitration in two weeks and that's been kicked to basically a year from now. Uh, everything's been done on it, but we're basically going to sit here and wait. And obviously that's just going to cost more time, you know, to get back up to speed in a year, meet with, you know, meet with the clients, go through all the documents again. So there, there are distinct benefits to going into arbitration. I agree.
Speaker 1 00:05:01 Okay. So I know that was a little sidebar, but I think it's important to get the perspective from everybody that's in the same industry. Um, so first question do light that through contractors have to be licensed to perform work in Ohio.
Speaker 2 00:05:14 So for if they're going to be practicing in certain trades, so HPAC, electricity, plumbing, hydronics, and refrigeration, you have to be licensed by the state of Ohio. Um, but most of the time, uh, really it's going to be by locale, by municipality. Each municipality in Ohio has their own requirements. A lot of them do mirror what Ohio state requires. Um, some of them are less, uh, less stringent on what the application and licensing process means. There's a difference between residential and commercial, residential there's different types of costs, whether or not the project is going to be. I think it's, I think one of them is a thousand dollars. If you're doing just remodeling stuff under a thousand dollars, you don't need something, but other and above the head, most of the municipalities in here do require you to be licensed or get licensed at least through the local or the state.
Speaker 1 00:06:08 Gotcha. Before you do any work. Okay. So in Ohio, well, let's start with the private projects who has lien rights in Ohio, who can lean a project.
Speaker 2 00:06:16 So anybody that is providing labor or work, um, on the job site or furnishing materials to the project and, you know, furnishing materials, we can talk about it later. Um, but Ohio is pretty fair in terms of what material men, uh, can do in terms of lien rights. Um, they don't, uh, we're pushing and there are some push, uh, to try to get lien rights to engineers and architects. Um, right now it's kind of a, a mix. Some people say you can't have lien rights, but there's a case law basically saying that if that engineer architect was providing onsite, um, work and further and self improvement than they have lien rights and, and that hasn't been exposed yet, it has been pushed. But other than that, it's, it's generally everybody that's working on the site.
Speaker 1 00:07:05 Gotcha. So potentially if you're an architect, an engineer that don't doesn't do any boots on the ground work that you couldn't have lien
Speaker 2 00:07:12 Rights, correct? Yeah.
Speaker 1 00:07:14 Gotcha. All right. So, and then, so notice requirements. So if I'm hired directly by the owner, is there any notice requirements I have to send before I file a lien or anything like that?
Speaker 2 00:07:25 No. If you're in indirect review of contract with the owner, um, there is no requirement to do what in Ohio is called a notice of furnishing. That's really limited to the subcontractors materials, suppliers, or labors. Um, but the GCs now.
Speaker 1 00:07:42 Okay. So in that, for that GC section, for that place, one contractor, when do they need to file their liens by, does it matter on project type or is it the same universal,
Speaker 2 00:07:50 So re residential, um, it's going to be 60 days from the date of your, the last labor work performed or materials furnished and then for commercial 75 days. Um, and then it's, it's 120 days on public improvement projects.
Speaker 1 00:08:08 Gotcha. And so after you filed the lien, do you need to send the notice to the owner that the copy of the lien that was filed to the owner and what is the timeframe to do that in?
Speaker 2 00:08:15 Yeah. So it's within 30 days of you recording that's that's the key is you don't want to send the affidavit prior to being recorded. You want to have an actual stamped recorded by the recorder's office for the low, where the project is SB within 30 days, you serve it on them. It can be based on, who's identified in the notice of commencement, which is generally what the owner has to record. And, uh, the only requirement is the owner part owner release hold interest for the property you're working on.
Speaker 1 00:08:50 Okay. So there's a notice of commencement on projects over what size, or is there a as for all projects or is there a,
Speaker 2 00:08:57 Yeah, so for any PR for any, any commercial project you're required to do a notice of commencements and that has to be recorded by the owner. Um, and then there's a whole multitude of scenarios that's outlined in the Ohio revised code. Um, basically it's supposed to be recorded prior to any labor or work performed on the site. Uh, if it's not in generally the general contractor or a subcontractor or interior supplier can request a copy of that. And if the owner does not record it, then essentially your lien rights are preserved until you receive a copy of that notice of commencement. And then you have 21 days to file a notice of furnishing from, from that point,
Speaker 1 00:09:38 From the time that you get the notice of commencement, if it's not fine,
Speaker 2 00:09:42 Correct. And one of the key things I think everybody should be aware of is don't expect if you're a subcontractor or material supplier, don't expect an owner or GC, just to provide you with a notice of commencement. If it's been recorded, there is no duty just to come out and give it to you. It's only a duty if you've requested it. And so prior to performing any labor, uh, supplying any materials, you should really just search the recorder's office to see if one is there, because then if it's not recorded, then you know, your lien rights have been preserved, even request one and move forward. That way we see a lot of issues with that where subcontractors will come and they didn't know a notice of commencement was recorded. They provided the work and all of a sudden they, the are scrambling. They filed our notice of furnishing. And if they do that, obviously once you file your notice, the first thing it's only preserving really that the work in which, in materials that you supply for 21 days prior to that. So it's a key thing that everybody needs to be aware of.
Speaker 1 00:10:43 Gotcha. So for place to, which is our subcontractors, they need to send that they need to send, or do they need to file a notice of
Speaker 2 00:10:51 Need to serve it and that's it. Okay. So
Speaker 1 00:10:54 On the owner and the general, or just the
Speaker 2 00:10:56 It's just on the owner, but a good rule of thumb is to serve it on both. And generally what I do is any, any person that's really identified in the notice of commencement, um, I'm going to put them on notice of a notice of furnishing. You know, some people get a little eerie about serving lenders or financial institutions. However, that could be looking at case by case situation. That could be a bullet in your chamber. So to say, to strong arm them, to pay you, uh, because the lender may have provisions to tap the project short or foreclose on the property themselves, if there's a lien that's going to be filed.
Speaker 1 00:11:33 Absolutely. And Elaine is all about creating leverage to get paid. And so how, how hard do you want to push? It's another, it's another tool that you can use, right? So the notice of furnishing needs to be sent within 21 days first work.
Speaker 2 00:11:46 Yeah. So, uh, then 21 days of the first Davy provided labor or for furnished materials, the project. Yes. Gotcha.
Speaker 1 00:11:55 Okay. And is that sent certified mail? What are the, what are the notice requirements in Ohio?
Speaker 2 00:11:59 Yeah, so generally, if it's a corporation, there's a specific statute that says, you know, you're supposed to be serving the statutory agent or the agent that is represented by the company. And so, uh, typically in the notice of commencement, they're going to be identifying the, the agent and the owner. And you can look up under the secretary of state who the agent is. I generally try to serve both the, the entity and the agent represented on the newest commencement. And if it's different, whoever the agent is identified by the secretary of state, because then you're kind of crossing your T's and dotting your eyes
Speaker 1 00:12:35 Double covered. So does it matter like certified mail or can I email it, does it matter the message
Speaker 2 00:12:40 It's certified mail return receipt? There's also can be sheriff service and generally with the corporations in most commercial projects or the public entity, it's going to outline that in your contract, but for Ohio, I always stick with certified mail or FedEx with return receipt, signature require extent. You've confirmed it without that. You're really not able to confirm that it's been served.
Speaker 1 00:13:04 Gotcha. So does it actually have to be received to be effective or can it just be sent and they never pick it up? Is it still,
Speaker 2 00:13:10 It has, it has to be actually served on them. So that's why if you, if, you know, unfortunately the unfortunate reality is a lot of times people would put, we'll put PO boxes. And so if you're serving that and somebody's not coming down to the post office to get that, or they just, you know, disclaim it and it's, uh, you know, unable to return, um, after 30 days of, of your attempted, right? Because you have to serve them within 30 days, if you can't do that, you have an additional 10 days. And what you have to do there is you have to take the, um, notice in basically post, it might take a step back. Cause I think we're getting ahead for the notice of furnishing. It just needs to be served. Okay. And we'll go into the affidavit for the 30 days, but the notice of furnishing can just be served if the most of the time in the contracts in Ohio, that I've seen the notice of furnishing, they'll get they'll outline it specifically who the authorized agent is, who can be served by. And it also may give you an additional, um, ability to serve that news of furnishing by email, on an owner rep or the contractor. Um, so paying attention to the contract and those terms can, can also help you out. Cause if the contract allows you to do that, then you're good by Ohio law.
Speaker 1 00:14:19 Okay, cool. Could they allow that in the notice of commencement too, or no?
Speaker 2 00:14:23 Yeah. The notice of commencement has to be recorded and then, um, it has to be provided basically once I noticed, uh, commencements recorded, right. It's up to the GC to get a copy of that. And then it's up to the subs and material suppliers to request that if it's not been provided to them, you know, it's supposed to also be published and on the job site. So that's another area you can ask a as a, as commencement published anywhere on the site and then you can get a copy of that.
Speaker 1 00:14:56 Okay. So for subcontractors and then material suppliers, they both have that same 21 days from first furnishing and first labor, they gotta send a notice out. That's correct. Okay. So then for subcontractor, when do they have to file their lien by we're talking to somebody who was hired directly by the GC.
Speaker 2 00:15:14 So for a subcontractor or a material supplier, it's, it's 60 days on a residential project or 75 days from the date of the last, uh, labor or materials furnished on the project. Okay. And that's generally how it is, is not extended at all. And there's always arguments in terms of the dates. So documentation, documentation, documentation is key.
Speaker 1 00:15:37 Absolutely. And it's the, and so like the LA the last work out there substantial work or what a punch through count or would warranty work.
Speaker 2 00:15:45 And so, and this is where Ohio kind of looks at it differently. Right. Um, they've generally said, punch punch list work is not considered, but the, the really is are you performing work in terms of improving the project? So if you're going back and you're re redoing, you know, if you're an electrician and you're, you're redoing some electric or you're redoing wires, my argument is it's absolutely on it. There's been cases where they've gone just to pick up equipment and they've found that to be, uh, providing improvement because they were cleaning up the job site. Yeah, yeah. It's yeah. It's local level, but you know, it hasn't been pushed to the corporate deals.
Speaker 1 00:16:26 Yeah. Awesome. Um, that's still works. Okay. And so once you file your lien okay. For subcontractors material suppliers at that timeline, how long do they have to send the copy of the notice and who did they have to send it to a copy of billing that was filed and who did they have to send it to?
Speaker 2 00:16:40 All right. So a copy of the affidavit, uh, once you file your affidavit for mechanics lien in Ohio, you have 30 days to serve it and you have to serve it on the owner owner park owner or leasehold interest. And this is where it has to be served on them. If you can't get serviced by the methods that we previously talked about, then you have 10 days to post it in a, in a not conspicuous place, basically where all the permitting and things like that are on the project site would be a good place to post it. And at that point you've made good service. Got it.
Speaker 1 00:17:13 Okay. All right. So once your lien has been filed, you sent notice is properly perfected. How long is it good for?
Speaker 2 00:17:19 It's good for six years. So, yeah. So you have six years lean unless a notice of commencement notice to commend suit is sent to you. Um, then obviously you're going to be disputing the validity of the lien, but otherwise it's six years.
Speaker 1 00:17:36 Cool. Very cool. All right. And so if you have to file suit to enforce your link, can you get back your attorney's fees?
Speaker 2 00:17:43 Yes. So there obviously there's two ways, right? One, you hope the contract provisions has that, that language. And especially in Ohio, because Ohio follows the American rule, which basically says the contract language governs for attorney's fees. But under, uh, I believe it's revised code section 13, 11, 16. It does allow recovery for, uh, your attorney's fees, but in a specific scenario. And it's basically when, when they say there's a fund and what a fund has been deemed as, as a bond. So if a lien has been bonded off, then you can seek your attorney sees. And obviously there's always the possibility that a court cannot word attorney fees based on the claims and the actions of, of the apartment opposing party, a very limited situation, but we've, we've seen recent success in the last five years of people getting those awarded based on egregious nature, delay tactics, um, you know, fi not paying them timely or withholding, you know, try to strong arm themselves and material suppliers to reduce their costs.
Speaker 1 00:18:48 Gotcha. So it's not just filing an enforcement or foreclosure that would entitle you to your fees automatically. No. Gotcha. It's a more limited situation, which is why they would take advantage of that and, you know, wait you out the six years, right.
Speaker 2 00:19:02 How much
Speaker 1 00:19:02 Is money? How much is money worth six years later?
Speaker 2 00:19:05 Exactly. I mean, and you know, what we're see a lot in Ohio is, you know, these developers are building big buildings and then they, you know, they with the intent to turn around and sell it. And so, you know, while Elaine may just sit there, you know, if they have ever had an intent to try to sell it, they have to get that lien removed. So bonding and off, uh, is, is a good surety. And then you can take the next steps if necessary to, to file a lien foreclose on it, on that bond.
Speaker 1 00:19:34 Okay. Cool. Very cool. All right. So back kind of back to incorporation for material suppliers, always a big question I get, cause it's different in all 50 states, you know, does the material supplier actually had to prove that it's incorporated? Can they just deliver it? Can their contractor pick it up? What is your level of, what do we have to prove in Ohio?
Speaker 2 00:19:52 So in Ohio first material spies, there's actually a specific section for material suppliers. Um, it's 13, 11, uh, 12, I believe it is. And it outlines, I think five scenarios. One obviously is with the intent that the materials are incorporated or used in the project. And that's really, all you have to show is there's a contract for sale, a delivery order or delivery to the site. And that, that gives you the conclusive in what the vice section specific it says is there's a conclusive presumption that those materials, if any, one of those things are met, that those are going to be used and incorporated into the improvement. And so it's, it's, uh, an easy, in my opinion, burden for material supplier to hit that without having the lien refuted, if you can show a contract or delivery order or actually delivery to the site, um, delivery to the site is going to clearly be a presumptive, a conclusive for bumps, and that it's going to be incorporated if you have those two other things as well. Um, obviously if it's an incorporated in the project, then it's done, um, for specifically fabricated materials. Um, what it says is specifically fabricated for incorporation now, whether or not that that doesn't matter if they're incorporated or not, it has to basically be unique to the project and that material supplier can't take those goods and resell them to another project. So if you have that, then you have lien rights.
Speaker 1 00:21:22 So let's go in the, in the specially fabricated. So the stuff has never delivered. When do I have to send my notices?
Speaker 2 00:21:28 So this is where Ohio gets kind of tricky, right? Because the law specifically says, you know, in terms of lien rights is when it's furnished, right. When it's delivered to the site are provided and that's effectively what the Ohio revised code is putting. In an example of the notice of furnishing, you're supposed to give the date of when it either is intended to be furnished or when it's going to be furnished. So, you know, if it's never delivered, right, you want to make sure if there's a date on the contract or the delivery schedule that it's, uh, it's giving you a date because then you have those, any rights, obviously memorialized in the thing, if it's not there, right? There has been case law that shows that if the material supplier delivers it to the site, they can put delivered or intend to deliver within 10 days.
Speaker 2 00:22:21 I'm going through an issue with that right now within the material supplier, um, it's been delayed and, um, their subs, you know, are, are getting frustrated because they're not getting paid and they're going to lean it. Um, and so, you know, it's going to be communication with the GC or whoever you're contracted with, but, um, you know, you can always, if you have the contract, they, you know, intended to purchase them, you've made them, they're sitting there, you know, then you can inform the contractor, Hey, I'm going to be delivering contractor for these easier going to deliver work. Where do I need to quote them, put that in your notice of furnishing and, and get them delivered to the site. They're refused. Then at least you have that intent. You've preserved your lien rights by the nose, the furniture.
Speaker 1 00:23:03 Cause you tried, you tried to do it.
Speaker 2 00:23:04 Right. Right. And even after the fact, you know, I would still, you know, if they're not delivered, right, there's a little bit of case law out there that talks about, uh, whether or not they're delivered or undelivered. And it still provides you once they're specifically fabricated. If they're sitting there to allow you to lean, right. It just how the notice the furnishing is going to be worded to make sure that you're preserving that. Gotcha.
Speaker 1 00:23:31 Okay. Good. Good to know. All right. Then the construction lender involved in the lean process, you said a little bit, not basically based on their agreement with the owner,
Speaker 2 00:23:40 Right. So, well, how rise code says is, is you have the option to serve the lender, but it's not a requirement. The only requirement is serving the owner part owner or Liesel interest. And that's it strategically, I think, depending on the relationship, if, if it's contractor, you're not going to be doing business with ever again, based on the experience and you want a strong hold on, then, you know, it could be a good idea to serve everybody. You just want to kind of weigh your pros and cons and probably talk with your attorney to determine if that's the best avenue and whether or not the contract says you can or can't do that.
Speaker 1 00:24:17 Okay. Uh, lease spaces, we can, you have a lien on a lease space.
Speaker 2 00:24:21 You can. So, uh, Ohio allows it for filing for the owner part owner or lease hold interest. So, uh, for instance, I can give you an example. We had a GC that was providing work for a grocer. The grocer was leasing a space in a strip mall, and we thought a lien strictly on the lease hold interest. One thing you kind of gotta be leery of is in the language of your affidavit, you want to either limit it to strictly moving for the leasehold interest, or it doesn't matter. You can keep going or part owner, or at least they'll have interest in that. However, if the owner or part owner comes back and says, Hey, I'm having issues. Um, you know, you, you kind of want to be leery in that you want to get confirmation that they have no interest in the leasehold interest. They don't care about it, get that in writing. And then you can file a release of the lien on a fee, simple interest, the ownership interest only, and that'll secure it.
Speaker 1 00:25:19 Gotcha. Okay. So kind of the same thing here, we are allowed to have a lean on the feet and the whole thing, if the owner was somehow paying for the improvements. So, um,
Speaker 2 00:25:30 Correct. Correct. And there's, there's it and people, I think defense attorneys and attorneys suing, I've gotten really creative on this. It's, you know, if the owner is leasing the space and they're aware of the improvements being done, you can make an argument that they still are bound by it. Um, you know, if, if they're disclaiming any interest in it, um, and you have that in writing, it's just going to be kind of weighing the pros and cons as to whether or not you want to bring them in there. Sometimes again, that could be strategy for putting pressure on that least interest to pay.
Speaker 1 00:26:09 Absolutely. Okay. So I did a little research on Ohio and you have some for a public project, you actually have two different ways to preserve your money. The first is like same in every state and federal it, just the bond. So if I'm working on a bond claim, uh, if I'm working on a state of Ohio project, what do I have to do to preserve my bond claim rights as, um, as a sub or material supplier?
Speaker 2 00:26:33 So, w it's it's very similar to on private projects that mirrors it, right? You have to do within 21 days of the, the Fertina furnishing at first material or labor provide a notice of furnishing to the owner. So to the city or to the entity of the state, uh, indicating that you're, you're doing that. And then you preserve it. Um, and then within, I think it's 120 days of the last, uh, date of labor. You're serving that affidavit for the claim on, you know, uh, contested bar, public funds. And, um, you're gonna want to put the GC on notice as well, uh, with that, but that's really, it it's, it's fairly mimics and mirrors, um, the private side, but, you know, there's some little nuances in terms of differences, but not very much.
Speaker 1 00:27:25 So you can also have a lien on the funds that are due to the prime contractor before,
Speaker 2 00:27:30 Correct? Yeah. So that's, that's generally how it works out is, you know, the lien is filed. It's going to be on the, the, the funds and that's going to be up to the contract total amount. And then the GC will likely bond it on that off, you know, and they have to bond that off at well above one and a half times the amount being claimed. And, and then from there, the public funds are released and you're, you're basically going on the bond.
Speaker 1 00:28:01 Gotcha. Okay. So what if by the time you send notice they've paid the contractor, everything, can you still, do you still have a lien or do you only have a lien to the extent that there's money owed to the prime contractor?
Speaker 2 00:28:13 Well, no. You would still have a lien because, well, you'd have multiple, you'd have a lien. You probably have a prompt payment act because if, if the contractor has been paid for the work materials that you've supply and they haven't paid you yet, um, but you would still have a lien. And, uh, obviously the, the, the city or the state is going to say, Hey, we've paid all the, all the mounts out. Um, but still it's going to have to be bonded off because all state and public proven products have a requirement for that. They have performance bid bonds and payment bonds. So they're going to, that's going to kick in their bond is going to come forward and they're going to put forth a bond over whatever claim to make sure that the project is free and clear of any liens.
Speaker 1 00:28:54 Gotcha. Because technically you can't lean a poet. You
Speaker 2 00:28:57 Can only lean the, the basically taxpayer dollars. Um, you know, that fund for the project that's approved by city council or the state.
Speaker 1 00:29:06 So do you ever have to send notice to a surety at all?
Speaker 2 00:29:08 Um, if so, basically if there's a, if there's a bond on the project, right. Um, which for any public improvement project with state of Ohio, there's going to be prior to filing, um, any type of lien on it. And it probably makes sense to, you know, a put the GC on notice. And if you have a copy of the bond, send a, uh, a claim to the surety bond company and then monitor that. So there's obviously surety bond companies take 30 to 60 days to review everything, to make sure. And then after they'll bond it off, but you want to kind of take two different routes. If the, if you're aware of there's a bond, you have a copy of the bond go after that way. If you're not going to get paid by the timeline that you have to file a lien, then you move forward with the lien. Most likely in both scenarios is all going to come to a head at one point. And hopefully by that point, when the lien comes in, the surety bond company has put up the bond, provided notice to the, uh, either the state or the city, and that gets approved by the state of the city. And then now you're just really suing on the bond by the shirt department, any work it out.
Speaker 1 00:30:16 So I just thought, just cause I'm curious, when you, if you have to file suit on the shirty, does the general contractor still step in and defend because it's their bond or is it, are you purely just going against the surety?
Speaker 2 00:30:27 So it's both, I've seen, uh, I I've seen where it's both where, you know, the surety bond company is pushing back on the GC saying GC you're at fault and Jesus ain't no, I'm not at fault. Um, and I've also seen it where the surety is tendered the defense to the GC, uh, based upon the surety provisions, that's the ladders, the more likely situation, at least in Ohio. Um, but it's happened both ways.
Speaker 1 00:30:55 Hmm. Because here, but it's more like the, the shirt he's like GCU take care of it. If there's a judgment against us, we'll write the check. But if they have to spend any money they're coming after whoever's bonded is to be taken care of. So,
Speaker 2 00:31:10 Right, right. Yeah. You're, you're, you're right on that. And most of the time, once that bond is there, but, you know, I think some, uh, some of the construction attorneys in Ohio have seen through that because, you know, at the end of the day, once all the evidence can tout the surety, you can always say, well, you did something completely wrong. Or if there was a fraud claim or anything like that, that wouldn't be covered by a bond. Um, you know, they're, they're looking at that. So they're, most people are starting to suit both just to keep that in. Um, and obviously if there's that bond you want to, um, you know, kind of assure that, that, that shirt is going to be paying you by the end of the day and that's how you kind of keep them in the lawsuit. Got it.
Speaker 1 00:31:48 Sure. I appreciate all this awesome information. Now, tell me your favorite construction law story for a client, how you helped the client when something that at construction law attorneys will nerd out on, you know? Yeah,
Speaker 2 00:31:59 Yeah. I mean, we've had, we've had, uh, you know, I can tell you there's a lot, right? There's, there's good, bad horror stories. Um, but I I'd probably have to say, um, we had a general contractor, we were representing, they had a great relationship. They're a specialty niche, uh, contractor. They do refrigeration and, uh, they were basically are contracted for five locations to redo it. I retrofit at the gates really became the GC for it, even though there were early, only doing the HPAC and plumbing for the refrigeration stuff and massive grocery stores, but big money came out to be an issue. I think it went four and a half years. And finally the court came out and was favorable to the clients, you know, that's that, that was probably the best just because it was long drawn out, you know, headache. And at the end of the day, you're kind of sitting there sweating bullets as the attorney going, this has been four and a half years.
Speaker 2 00:33:03 You paid me how much money, you know, we don't know now, but, you know, if I had to say, uh, alternative, uh, I represented a home owner against a, um, uh, unlicensed general contractor that flipped the house there. And I'm sure everybody's aware, there's there's GCs that are unlicensed, that are doing these house flips. And they do them very fraudulently. Um, and the homeowners were able to get their money back and get the house back up to shape. And there was all kinds of hidden mold and bees nest and carpentering it and everything like that. So that's kind of the, the heartfelt one, the business one certain goals
Speaker 1 00:33:44 Doesn't mean, especially when you love what you do, it's never boring.
Speaker 2 00:33:46 Right, right, right. You see it all, you see it all
Speaker 1 00:33:49 Exactly from angry homeowners to, you know, collecting material suppliers, money, it's, you know, it's all rewarding.
Speaker 2 00:33:55 Yeah. Yeah. And it's all unique. And with techno with all the technology and the materials being, you know, evolving and the differences, uh, it's, it's getting really interesting and it's, it's always, I'm always learning always.
Speaker 1 00:34:08 Now, let me ask you one more question. It's just kind of, because I'm on a mission, what do you think about subcontracts?
Speaker 2 00:34:15 You know, uh, my father-in-law would say a handshake's good enough since he is a subcontractor. Um, but you know, I think a, there's kind of two ways to look at this, right? As a subcontractor, you're kind of, you know, the whole into the GC, right. You work for a lot of big GCs. GCs are going to say, here's our contract, that's it, there's nothing changed. Right. That that's a problem. Uh, you know, but if there's an opportunity for subcontracts to be modified and made favorable, or at least reasonable to subcontractor, I'm absolutely all for it because subcontractors material suppliers do get the wrong end of the stick a lot of times. And then they're kind of left with their hands in their pockets when it could have been protected up from if they would review that. Uh, and it could just be simply as modifying your purchase order, um, or anything else just to have those key terms and provisions in there. But, um, you know, I, I, I suggest now in the nature, especially in Ohio, uh, with contract lobbying, kind of the final say, and the final word that, you know, you need to take a look at them and you need to make sure you're protected.
Speaker 1 00:35:23 Well, exactly. I mean, cause I'm, I'm really, I think, I think what's happened over the years is that attorneys have done a good job drafting, something that would protect their client, thinking that there was going to be a negotiation. And then with the, is there just never was. And so now we've gotten these massive things are all, basically shit rolls down hill. Right. And now we have a little guy you're taking 100% of the risk and then we wrong. He doesn't know that he's taking 100% cause he can't even read it. Right. Just, it just, okay. Even if you're going to put all the shit in there and let's just make it so you could read it because it takes me a lawyer, like four times of reading it to try to say what we're trying to say. Just what,
Speaker 2 00:36:02 Right. Yeah. I mean, I, I, I, I just had, it was 129 page contract for electrical subcontractor and okay.
Speaker 1 00:36:11 Yeah. Sorry, from your opinion, what could we have done that in 10 pages and just
Speaker 2 00:36:16 A hundred percent? And I mean, I'd probably mark 20 times redundant and it was all those redundancies were, you will not Sue the contractor. You can't see the contractor. There's nothing you can do against us. You know, you can't file a lien, you can't do this. You're going to waive all your rights. I mean, repetitive, repetitive, repetitive, repetitive. And I mean, it could have been dumbed down to 10 pages. Exactly.
Speaker 1 00:36:37 You can make it whatever you want. Let's make it simple and easy to read. Right.
Speaker 2 00:36:41 Right. And I mean, the other thing is that, and I, when I tell some of the general contractors that you represent is look, just make it reasonable. Cause they, if you're gonna make it reasonable, you're gonna protect them. And you know, they're going to do better work for you and they're gonna want to continue working for you. And if they're good at what they do, then now you have a relationship develop. Um, but you know, on the flip side is if you're not doing that, you're really good subcontractor. Um, you're not gonna want to do, you're probably not gonna wanna do business with that. And then you're going to go to another GC. That's willing to work with you and protect you and do the right things. And that's gonna create better competition for the subs, but that's just, it's unfortunate, but that's the way the world right now.
Speaker 1 00:37:17 Yeah, absolutely. I'm really, I'm really in a push to just, even if we, as, as attorneys, just review it and tell the subs what's in there and I'm not all for making it sub all one subsided let's make something in the middle. Like I think it used to be right until we get, I don't know how we ended up in this mess where if you're going to be a subcontractor, you just might as well hold your nose and sign it and hope that you'll make it through it because that's not a way to conduct business. And especially because I think a contract is supposed to tell you what you're supposed to do, but if you can't understand it, how do you know what you're supposed to do?
Speaker 2 00:37:50 Right. I agree with you. And that's kinda the one thing I'm sure you do it. I mean, when I'm going through them, I mean, I'm highlighting and putting boxes in, you know, be aware of this, you know, especially on a lot of the claim provisions because in Ohio, the claim provisions, I mean, they're upheld. If you're not doing it strictly by the book, then you can basically be held to have waived that claim. That colleague of mine had a case where, I mean, they submitted, I think it was like 36 claims, constantly doing exactly what the contract, the contractor came back and said, quit sitting, submitting this, we get it. We know you're doing this. You don't need to submit them anymore. And they stopped. And every single claim after that, they were found by the court to have waived because they didn't follow the contract revisions.
Speaker 2 00:38:35 And so, you know, if, uh, if a sub's not re you know, reading that until when necessary, that's the problem. So, you know, it's a lot of, you know, yellow highlighting, uh, and you know, text boxes to make sure everybody's aware of it. And then, you know, subsequent to that, we can go through it through a quick zoom call or something like that. Say, Hey, here's the real big things that you need to be aware of. And here's what we really should change. And if they're not going to change it, here's how it could play out. And at least let them make it. But no, a lot it's majority of time, as you know, it's, it's after the fact, right. You know, well, call me now or call me later, you're going to be calling me at some point. And, you know, that's, that's the unfortunate reality for subs and material suppliers.
Speaker 1 00:39:17 Yeah. I don't know. I'm on a mission to change that, but oh, one other question for Ohio specifically, can you pre waive your lien rights in a contract? Some states allow it some states don't no,
Speaker 2 00:39:26 You cannot. Okay.
Speaker 1 00:39:28 Does I know in New York you can, but Texas, you can't, you can not, can
Speaker 2 00:39:32 Not allow that.
Speaker 1 00:39:33 Awesome. Well, thank you for all the great information and we'll put your contact information in the show notes. If somebody can contact, if you have want to reach out, um, this is just part of the project that I'm working on of making subcontracts to understandable and somewhat fair, and letting people know that their lien rights and that they have these rights and they can secure them off of their owed, but they have to do it the right way. No,
Speaker 2 00:39:53 So absolutely fantastic. I think this is a great, great project and, you know, looking forward to probably listening on a few others for states that I have no idea about. So
Speaker 1 00:40:02 Absolutely. And like I said, Texas is so complex. It just required its whole own book and I've kind of dabbled. I've kind of studied all 50 states. And so I kind of have a perspective on it, but, um, you know, once you've been in it so long, it's kind of the same. So, all right, Andrew, thank you so much. Uh, and we'll probably have you on again to talk about something else exciting, like more, how it can change sub contract terms, maybe the pay when paid clause or fun, things like that.
Speaker 2 00:40:30 We could talk all day.
Speaker 1 00:40:31 Oh, absolutely. Since COVID respectfully. All right. Thank you, Andrew. Thank you for listening to this episode of quick getting screwed. I hope you found it helpful if you liked what you hear, please like us and follow our podcast. If you want further information. So you can find us. Subcontractor is two.com. We're also on Facebook, LinkedIn and Instagram, and the book is available on Amazon tune in two weeks now for a new episode. Thank you.
