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Original Contractors, Subcontractors, and Construction ManagersThe Ohio mechanic’s lien statutes provide almost identical definitions of the terms “original contractor” and “principal contractor”. Both terms refer to one who undertakes to construct, alter, erect, improve, repair, demolish, remove, dig or drill any part of a private or public improvement pursuant to a contract with the private or public owner of the improved property. Both refer to “persons” who are in direct privity of contract with the owner of the improvement. The only difference between the terms is that an original contractor undertakes its work pursuant to a contract with the owner of a privately funded improvement, while a principal contractor provides its work pursuant to a contract with the public authority sponsoring the public improvements.The term “subcontractor” has an identical meaning on both private and public improvements. It refers to a person who undertakes to provide the same type of work as an original or principal contractor, but does so pursuant to a contract with one other than the owner or public authority.The term “construction manager” is a person that is in privity of contract with the owner, part owner or lessee of the improved property who has substantial discretion and authority to manage or direct an improvement. Construction Managers are considered to be “original contractors” for purposes of the private mechanics’ lien statutes. MaterialmanThe Ohio mechanic’s lien and construction bond statutes provide a lien and bond rights to materialman. The Ohio Revised Code defines a “materialman” as one who provides “materials” in furtherance of an improvement. The lien statutes require that the materials be provided to an owner, original contractor, principal contractor or subcontractor. Ohio Mechanic’s Lien Statutes deny lien rights in connection with claims arising from the provision of materials to materialman. The courts have distinguished between materialman and subcontractors by holding that a materialman’s function is to obtain, deliver and prepare materials for incorporation into or use in connection with an improvement, and that the subcontractor’s function is to actually use or incorporate them into an improvement.One must provide “materials” in order to be considered as a materialman. “Materials” are defined, for purposes of the mechanics’ lien and construction bond statutes, as:All products and substances, including, without limitation, any gasoline lubricating oil, petroleum products, powder, dynamite, blasting supplies, and other explosives, tools equipment or machinery.This definition, which is an amalgamation of the common law definition of materials and former 1311.27 of the Ohio Revised Code, essentially categorizes substances incorporated into an improvement, consumed in the course of an improvement, or otherwise intimately connected with the improvement as materials. The Ohio Revised Code requires that the substances or items be furnished with the intent that they be used in the course of the improvement.As the foregoing makes clear, it is the nature of the materials provided that makes a claimant a materialman. However, it is not enough to provide any substance or item fitting within the statutory definition of materials. The materials must conform to the underlying improvement contract to give rise to lien or bond rights. Furthermore, the delivery of the materials must have a sufficiently close temporal relationship to the underlying contract to give the supplier lein rights, as the courts have struck down putative liens filed to secure claims for materials provided either prior to the formation of the underlying contract or after its completion.If the materials conform to the underlying contract, all a materialman need do is deliver them to the job site to be entitled to a mechanic’s lien. Once conforming materials are delivered, the Ohio Revised Code creates a conclusive presumption that they were incorporated into the improvement or used in the normal process of constructing the improvement, thus giving rise to lien or bond rights, regardless of whether the materials were actually used in connection with the improvement. Furthermore, that presumption arises if the materials were delivered by someone other than the materialman.Further, qualifying materials brought into Ohio for use in connection with an Ohio improvement will give rise to lien rights in spite of the fact that they originated or were supplied b an entity outside of Ohio.

Ohio law places a mandatory obligation on the “owner” of both public and private construction projects to prepare a document known as a Notice of Commencement. The forms themselves have differing attributes between public and private jobs and the obligation of the “owner” varies as well. Prior to the start of construction, the private project owner is required to file the Notice of Commencement with the County Recorders for the county or counties where the project is located. The public authority’s obligation is to keep the Notice of Commencement-Public on file and to make it reasonably available to the public. It is the completion of these obligations that set up the obligation of subcontractors and materialman to prepare and serve a Notice of Furnishing for private projects or a Notice of Furnishing-Public on public projects.

Are there any major differences between residential and non-residential private construction projects?The Ohio Revised Code defines three types of private construction projects: i) “Residential” projects, defined as one and two family dwelling or a residential unit of a condominium property; ii) gas and oil wells and iii) all remaining private construction projects. Residential projects are further divided between (a) the homeowner type and (b) others. The major difference between residential and non-residential construction projects relate to time for filing the Affidavit of Lien. Another difference arises within the residential construction definition. Here, if the project is being constructed or improved and the owner is or will be living in the residence and the project is a single or double family dwelling, or a single unit of a condominium property that has been submitted to the provisions of Chapter 5311 of the Ohio Revised Code, the project is exempt and therefore the Notice of Commencement/Notice of Furnishing scheme. If the residential project does not meet these tests, it is not exempt and therefore the Notice of Commencement/Notice of Furnishing scheme applies as if it were not a residential project. A major error that frequently occurs, however, is that potential lien claimants frequently confuse this exemption with the time period for filing the Affidavit of Lien. The time period on all residential projects is sixty (60) days (regardless of the presence or absence of the homeowner exemption), for oil and gas wells 120 days, and for all others 75 days.Said another way, a Notice of Commencement is required to be prepared and filed in connection with all residential construction projects except the homeowner type of residential construction project. A Notice of Furnishing is only required to be served if a Notice of Commencement is filed pursuant to statute. Therefore, a Notice of Furnishing is never required to be served on a homeowner type of residential project

There are several major differences. The primary differences are: (1) the time period for filing the lien with the County Recorder for a private construction project versus the service of the lien on the public authority and subsequent filing with the County Recorder on a public project; (2) as the lien of a private construction project attaches to the improved real estate whereas the lien on a non-federal public construction project attaches only to the fund allocated by the public authority for the performance of the project. The public lien should be served on the public authority not later than 120 days after the lien claimant’s last performance of work or provision of materials; thereafter, the public lien should be filed with the County Recorder. Because the lien on a public project attaches only to the remaining funds for the project, it is possible that even if the lien claimant properly serves the lien within the prescribed time period, the lien will be ineffective if the fund has been depleted.

The primary rule of thumb, for both public and private projects is that the Notice of Furnishing must be served on all necessary parties within 21 days of the first day the lien claimant provides labor and/or materials in connection with the subject construction project. Materialman delivering materials to the project via common carrier must count their material as delivered as of the date that the material was delivered to the common carrier. The only exceptions are (a) homeowner type of residential project; (b) projects where no Notice of Commencement has been filed and (c) private projects where the lien claimant has served a Request for Notice of Commencement on the project owner or its designee and the owner or designee fails to serve a copy of the Notice of Commencement on the requesting party within 10 days of the day the Request was served. In the case of c) above, if he Notice of Commencement is not timely served after such a request, the 21-day time period for serving the Notice of Furnishing is tolled and begins again after the receipt of the served Notice of Commencement.

The number of parties required to be served with the Notice of Furnishing depends upon the status of the various parties involved in the project. An original contractor, one having a contract directly with the Contracting Party is never required to serve a Notice of Furnishing. Subcontractors and materialman in direct contract with an original contractor must serve the Notice of Furnishing on the Contracting Party or the owner’s designee, if any. Subcontractors and materialman in contract with any other party must serve the Notice of Furnishing on the Contracting Party or the owner’s designee, if any, and the original contractor. It is possible to have more than one original contractor. In such a case the Notice of Furnishing, if required to be served on any original contractor, must be served on the original contractor under which the potential lien claimant provided its labor and/or materials. In addition, if the Notice of Commencement identifies an owner’s designee, the subcontractor or materialman not in contract with the Contracting Party, must serve the Notice of Furnishing on the owner’s designee and not the contracting party.What are the time frames for serving, filing and perfecting the varying types of lien?Private project liens on a residential project must be filed with the County Recorder within 60 days following the day of the last labor and/or work provided by the lien claimant. Liens on gas and oil wells are to be filed within 120 days. All other liens on private projects are to be filed with 75 days. Liens must be served on the contracting party or owner’s designee within 30 days of the date that the Lien was filed with the County Rcorder. Liens on non-federal public projects must be served on the public authority within 120 days and filed with the County Recorder within 30 days thereafter. Because these are liens against funds, unlike a lien on a private construction project that is a lien against the title to the improved property, filing the lien even within 120-day period may not assure the lien claimant of a good lien as to the public authority may have already disbursed the funds to the principal contractor leaving nothing to which the lien may attach. It is important for this reason, among others, to also perfect a bond claim against the principal’s payment bond, which is required to be posted for the benefit of the public authority and subcontractors and materialman as defined in Chapter 1311 of the Ohio Revised Code.Materialman delivering materials to the project via common carrier must also be careful in the calculation of their lien date. Generally, a materialman may count their lien time from the date that the material was delivered to the project. Where the material is being delivered to the project via a common carrier, the lien date is calculated from the date the material is delivered to the common carrier, not when the common carrier delivers it to the project. The materialman may overcome this trap by delivering the materials to the project via its own truck.Liens against the homeowner type of residential construction are subject to a restriction similar to that of the public project. While the lien is actually against the title to the improved property, it is limited to the amount still owed to the original contractor. The mechanic’s lien statutes provide the additional protection to the Homeowner of not having to pay twice for the same work, provided they do not make such payments after they receive service of the filed lien. Therefore, it the Homeowner has paid the contract price or more than is remaining due under the Affidavit of Lien, their liability under the Lien will be limited to the remaining balance due under the contract.

Yes, after the affidavit of lien is filed with the County Recorder, a copy of the Affidavit of Lien must be served on the Contracting Party or the owner’s designees. The Affidavit of Lien is only used in private projects.

Mechanic’s lien can only be amended under two circumstances, i) if the original period for filing the lien has not yet expired, the lien may be amended and refilled and, ii) if the Notice of Commencement contained incorrect information which the lien claimant relied upon causing the lien to be incorrectly filed or contain incorrect information, the lien may be amended at any time during the original six year life of the lien.

Mechanic’s Lien in Ohio have a life span of six years following the date that they were filed with the County Recorder. A foreclosure action enforcing the lien must be filed prior to the expiration of the six year period. This time period cannot be extended or renewed. The commencement of a foreclosure action by another party, naming the lien claimant as a party-in-interest, does not extend the time for the lien claimant to assert its claim, even if the lien claimant files its answer and cross claim within the time prescribed by the Civil Rules.