If you are working on a publicly funded project, you are unfortunately not allowed to record a mechanics lien to recover your payment from a delinquent client. The right to file a mechanics lien applies mostly to private projects, although this does not mean you have no options if you get embroiled in a payment dispute.
Certain construction parties working on public projects are allowed to make a payment bond claim by serving a bond claim notice. General contractors in public projects are required by law to furnish a payment bond, specifically so lower-tier contractors are protected in cases of payment disputes and delays.
This guide explains the process of serving a payment bond notice in Ohio.
- Who can make a bond claim in Ohio?
- Preliminary notice requirements in Ohio
- How to serve a bond claim notice in Ohio?
- Best practices when serving a bond claim notice in Ohio
Who can make a bond claim in Ohio?
Subcontractors and material suppliers working on public projects in Ohio are allowed to serve a bond claim notice. Ohio rules allow these participants to make a payment bond claim regardless of their position in the contracting chain, so sub-subcontractors and suppliers to subcontractors are also allowed to make a bond claim.
General contractors cannot serve a payment bond claim notice because they are the ones who furnish the payment bonds. They cannot make a claim against their own bonds. Suppose you are a general contractor and you find yourself in the middle of a payment dispute with the public entity who contracted the project. In that case, you may recover your payment by pursuing a lawsuit against your client for breach of contract.
Preliminary notice requirements in Ohio
In Ohio, parties may not make a payment bond claim without serving an Ohio Notice of Furnishing. The Notice of Furnishing is a preliminary notice that ensures your bond claim rights are protected.
Parties working on public projects in Ohio and whose contracts are worth over $30,000 must serve a Notice of Furnishing on the general contractor to preserve their bond claim rights.
When must you serve the Notice of Furnishing?
The Notice of Furnishing must be served within 21 days of the date when you first started working on a project. This preliminary notice deadline applies to both private and public projects in Ohio.
How must you serve the Notice of Furnishing?
You may serve the Notice of Furnishing via certified mail or personal delivery. If served via certified mail, the Notice of Furnishing is considered served on the date of mailing. If served via personal delivery, the notice is considered served on the date the general contractor receives the document.
When is the deadline for serving a bond claim notice in Ohio?
The bond claim notice in Ohio must be served no later than 90 days after project completion but not before your last day of work. In other words, you must serve the Ohio bond claim notice after you last furnished services to a project and before the 90th day following the project’s completion.
How to serve a bond claim notice in Ohio?
- Prepare the Ohio bond claim notice form
- Mail the Ohio bond claim notice form
- Enforce the Ohio bond claim
1. Prepare the Ohio bond claim notice form
The Ohio bond claim notice form only requires a statement of the unpaid amount that is being claimed. While this is the only piece of information that is required, you may also add the following details to provide more context to your payment bond claim:
- Your name and address
- The name and address of the surety
- The name and address of the general contractor
- The name and address of the party who hired you
- A description of the services that you served
- A description of the property location
Note that you may not forget to add the specific amount that is due to you. This amount must also be reasonable and must not be bloated just to try to get more money from the surety.
2. Mail the Ohio bond claim notice form
Once your payment bond notice form is ready, you may serve it on the surety. Only the surety is the required recipient of the payment bond notice in Ohio. However, you may choose to serve your payment bond notice on the general contractor as well as the party who hired you, if different from the general contractor.
You may serve the Ohio bond claim notice via registered or certified mail or online. These service methods are not specifically required by law, but they are the most commonly used delivery methods. It is also easier to track and prove that you have served the Ohio bond claim notice when you serve it by mail rather than by personal delivery. You may serve your Ohio bond claim notice form via Handle.com.
3. Follow up with the surety
After mailing the bond claim notice, you should follow up with the surety to confirm that they have received your payment bond claim. They may also have additional requirements for you to do, which is why you must establish communication with the surety after making your bond claim.
If the bond claim process goes smoothly, the surety will pay you your due payment, and you do not have to do Step 4.
4. Enforce the Ohio bond claim
This step is necessary if it does not seem like you will be receiving your due payment. Enforcing the bond claim means initiating a lawsuit against the surety so the court can order them to release your payment. Note that this is a full-blow lawsuit that will require the expertise of lawyers.
You have 60 days after serving the bond claim notice to enforce an Ohio bond claim. Beyond this 60-day period, the bond claim expires, and it will no longer be enforceable. An expired bond claim will have no use at all, so you must enforce a bond claim before the 60-day period elapses.
Best practices when serving a bond claim notice in Ohio
Remember to serve a Notice of Furnishing
Before you can make a bond claim in Ohio, you must first serve a Notice of Furnishing. This is a hard-and-fast requirement, so be sure to fulfill this preliminary notice requirement to ensure that you preserve your bond claim rights.
Be mindful of the deadlines
Serving a bond claim notice in Ohio must be done no later than 90 days after project completion. Keep this 90-day deadline in mind to ensure that you are able to exercise your bond claim rights. Also note that you only have 60 days or roughly 2 months to enforce your bond claim after serving the bond claim notice.
Enforce your bond claim if needed
If the surety fails to honor your bond claim and release your due payment, be aware that you may enforce the bond claim and let the courts decide the payment dispute’s conclusion. Enforce your bond claim in Ohio with the help of lawyers to ensure that you are able to recover your hard-earned payment.