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Does this mean the general contractor can come back on us?

We received a partial lien waiver and there is a paragraph in the lien waiver I have never seen before. It says the following: (This Paragraph Applies only to Subtier Subcontractor) To the extent Subcontractor receives the Payment, Subcontractor shall indemnify and hold harmless Regency, its surety, and the Owner, from and against any lien, bond claim, demand, lawsuit or other claim asserted by Subcontractor or those under its control related in any way to payments that Subcontractor received, excluding unexecuted change orders or time & material work orders authorized by Regency still being performed during this period. If we sign this does it give the general contractor the right to come back on us?

1 reply

Mar 27, 2020

It's impossible to know the full extent of a particular phrase, sentence, clause, or section of a contract without also taking the entire document into account. In contracts, context is crucial. So, for the most clarity, it'd be wise to consult with a local Ohio construction attorney to have them review the agreement. With that being said, let's see what we can glean from the portion posted above. Based on the information you provided: That section sounds like it requires the subcontractor to hold the higher-tiered parties harmless from claims made by the subcontractor's own subs and suppliers as long as the subcontractor receives "the Payment." Further, it sounds like it's acting sort-of like a conditional lien waiver by stating the subcontractor won't file a claim, themselves, if they receive "the Payment." Though, it's worth remembering that a claimant won't have mechanics lien rights if they're fully paid, anyway. So, as long as the terminology regarding "the Payment" represents full payment, then the subcontractor shouldn't really be waiving their own lien rights - they wouldn't have lien rights if fully paid, anyway. And, if the subcontractor pays all of the parties "under their control" what they're owed, then those parties wouldn't have lien rights either. Meaning, there may not be much to hold those parties harmless from. But, if one of the subcontractor's subs or suppliers does end up making a claim - under the brief portion posted above, the subcontractor would be in charge of making that claim go away and holding the higher tiers harmless from the claim. Again - take this with a grain of salt. To fully understand how any given portion of a contract operates, full context is necessary. For that, it'd be wise to consult with an Ohio attorney so they can review the document in full as well as the project circumstances.

Construction contract resources

I hope this was helpful. In addition to the above, here are some additional construction contract resources. - Construction Contracts Overview, FAQs & Resources - Construction Contracts – Beware of Certain Clauses

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