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What is our financial responsibility in this situation?

We are a GC who hired a subcontractor to do several job sites of a large project for us. During the course of the project, they in turn hired several services (hydro excavation, concrete pouring, etc). Now that the project is over and our subcontractor has been paid all funds due to them, it has come to our attention that they stiffed one of the services they hired (hyrdo excavator) for about $5,500. Our client is getting very upset, the service provider is coming at us, and the subcontractor has already been paid for these job sites, and will not return phone calls, emails, or text messages. My question is this - does this service provider have a any legal standing to come after us or our client for these funds, since they were not a material supplier of any kind? These jobs were performed over 120 days ago.

1 reply

Nov 14, 2019

Considering mechanics liens are one of the most common ways of attempting payment recovery, let's start by looking at Ohio's mechanics lien laws and how they might be treated in this situation. Then, we can look more broadly at the ability of a service provider hired by a subcontractor could look to the job's contractor or owner for payment.

Ohio mechanics lien rights

Ohio's mechanics lien statute broadly prescribes lien rights. Those who provide construction-related work and services may be entitled to file a mechanics lien against the project property in order to get paid - even when they're hired by someone other than the property owner, such as the contractor or even a sub. So, a party hired by a subcontractor may well be entitled to file a mechanics lien, which could put both the owner and the general contractor on the hook for payment. Still, there are requirements that will come into play for those hired by someone other than the property owner.

Subs and suppliers must typically send Notice of Furnishing to preserve mechanics lien rights

If a Notice of Commencement was filed on the project, all subcontractors and suppliers must send Notice of Furnishing if they want to utilize mechanics lien rights for recovery. So, if a sub-subcontractor did not send notice, they'll generally not be able to file a valid and enforceable mechanics lien. More on Ohio's notice requirements here: Ohio Preliminary Notice Guide and FAQs.

Ohio's mechanics lien deadline

Ohio mechanics liens must generally be filed within either 60 or 75 days after the claimant's last furnishing date. For oil and gas projects, this might be extended to 120 days. But, if the timeframe for lien passes without a mechanics lien filing, then the lien claimant won't be entitled to file an enforceable lien claim anyway - even if the underlying lien would have been valid if timely filed. More on Ohio's lien deadline here: When is the deadline to file an Ohio Mechanics Lien?

Other remedies that may be available to an unpaid sub-subcontractor that might hold the contractor or owner responsible

Usually, when there's a failure to make payment, the dispute remains between the two parties who contracted with one another. Generally, a sub-subcontractor is entitled to pursue claims against their contractor - like a breach of contract action, or a claim under Pennsylvania's prompt payment laws. But, an unpaid sub-subcontractor may end up having claims against the property owner or even the project's contractor. Even where there's no relationship between the claimant and the owner or contractor, recovery could be possible under a theory like unjust enrichment.

How to get a subcontractor to take accountability for their failure to pay

Reminding a subcontractor that nonpayment is their problem, too, might help to bring them back into the fold and force them to make payment. Threatening legal action, complaints to the Ohio Industry Licensing Board, and even assisting a sub-subcontractor in their recovery efforts against the subcontractor may all be ways to put pressure on a nonpaying subcontractor. Further, threatening or actually making complaints about their business to the Ohio attorney general's office, to the Better Business Bureau, and even elsewhere online (like Google, Facebook, Angie's List, etc.) could add additional pressure, too. If the dispute affects their business' ability to obtain other jobs, they may be more inclined to do the right thing and pay what's owed. Finally, when nonpayment has become a serious issue on your job and it seems like a bigger payment dispute or legal problems might erupt, it'd be helpful to consult with a local Ohio construction lawyer. They'll be able to review your circumstances as well as any relevant documentation and advise on how best to move forward.

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