New EPA Lead Paint Regulations Take Effect April 22, 2010

A number of years ago the EPA established regulations relating to the disclosure of lead-based paint in residential housing built prior to 1978. The regulations required the landlord to provide a lead-based paint disclosure form to prospective tenants. Only certain types of housing were exempt including those that had been certified lead-free by a certified inspector.

On April 22 new EPA regulations take affect that apply to any renovations of pre-1978 housing. The new “EPA Renovation, Repair and Painting Rule” applies to all “renovations performed for compensation in target housing and child occupied structures.” Target housing is defined as housing constructed prior to1978, with the exception of housing for seniors or the disabled, unless a child under 6 is expected to reside, and 0-bedroom (studio) apartments. “Renovation” is defined as “the modification of any existing structure that results in the disturbance of painted surfaces. To qualify, more than 6 square feet per room of interior painted surface must be disturbed or 20 square feet of exterior painted surface.

These rules call for the contractor to use lead dispersal prevention techniques when performing renovations - much like those required of asbestos abatement firms.

Housing which is tested and determined to be lead-free in accordance with the regulations are not subject to the provisions. Also exempt is work done by an owner in an owner-occupied home where there is no child under 6 and no pregnant women.

The regulations require that the entity performing the work must be EPA certified. If the owner is performing the work personally, they must become certified. The EPA accredits training providers.

The rules regarding lead-based paint disclosure by landlords has not changed. A disclosure statement must be given to all prospective tenants prior to their tenancy unless a certified inspector has declared the structure to be lead free. But any contractors or owners performing renovations of housing built prior to 1978 must now comply with the new construction rules.

Ohio's Mechanic's Lien Law - Public Improvements

In a prior blog, I discussed the use of mechanic's liens and the statutory requirements prior to the recording and perfection of such a lien. That blog discussed the use of mechanic's liens for private improvements - improvements on property owned by non-public individuals and entities. The purpose of this blog is to discuss the requirements when perfecting a "lien on public improvements.

A “Public Improvement” means any construction, reconstruction, improvement, enlargement, alteration, demolition, or repair of a building,..., and any other structure or work of any nature by a “public authority.” A “Public Authority”includes the state, and a county, township, municipal corporation, school district, or other political subdivision of the state, and any public agency, authority, board, commission, instrumentality, or special district of or in the state or a county, township, municipal corporation, school district, or other political subdivision of the state, and any officer or agent thereof.

In applying the law to Public Improvements, the language is really a misnomer as the law does not permit a subcontractor to record a lien upon land owned by a public authority (see definition above). What the law does permit is the right of the subcontractor to place what is termed a “lien upon the fund.” As a result, the prerequisites are somewhat different.

The law is the same when it comes to an owner’s obligation to prepare and have readily available, a Notice of Commencement. Unlike a private improvement, the Notice of Commencement need only be retained by the general contractor (known under this section of the statute as the "original contractor"). It need not be posted or recorded.

While the subcontractor is required to prepare and serve a Notice of Furnishing, the law requires service upon the principal contractor only - not the owner - within 21 days of the of the material being furnished and/or the subcontractor commencing work on the job. Not withstanding this difference, I recommend my clients serve not only the original contractor, but the owner and surety (see my discussion of surety liability in a prior blog).

Having properly served the Notice of Furnishing, the subcontractor may serve an “affidavit” upon the public authority within 120 days of completion of its work, setting forth certain information required. Upon receipt of the affidavit, the public authority must set aside sufficient funds to pay the subcontractor. The public authority is then required to serve a copy of the affidavit upon the principal contractor who must dispute the claim within 20 days. If the claim is undisputed after 20 days, the public authority must pay the subcontractor. Any public authority, principal contractor or subcontractor may dispute the claim and send the claimant a “Notice to Commence Suit” which must be filed within 60 days of receipt of the notice. Once again, proof of service of the documents set forth in these statutes is critical to ensure proof of service and protection of a contractor's rights

Surety Liability

Most contractors believe that a surety’s liability is absolute if the subcontractor’s statement is not paid. This is not true. Once again, the Ohio Revised Code sets forth the requirements before a subcontractor can demand payment from the surety.

If the subcontractor is owed more than thirty thousand dollars, a Notice of Furnishing has to to be served upon the surety as set forth in the mechanics’ lien law. This means that the surety must be served with a Notice of Furnishing within 28 days of the first work being perfomred or material furnished.

Upon completion of the job, or the last material being furnished, the subcontractor must serve the surety with a statement of the amount due within 90 days of the completion of the contract and acceptance by the owner of the property. After 60 days, the subcontractor can commence a law suit against the surety, but this lawsuit must be filed within one year of acceptance by the owner.

Lets use an example to deonstrate your obligations under the law. You are contracted by the general contractor to supply and install a floor in the new high gymnasium. You commence your work on January 1. You complete the work on March 31 and the board of education provides a notice of acceptance on April 30. The original contractor goes out of business prior to the entire gymnasium is completed and you have not been paid.

What is required of you prior to the surety's liability in this example? First you had to provide a Notice Furnishing to the surety within 30 days of the commencement of your work, or in this example, by January 30. You then must notify the surety within 90 day of the acceptance of the work by the property owner, or in this example, by July 30. Failure to provide either of these notices, on a timely basis, may preclude your sharing any surety's distribution.

I would also point out that many bonds require that all funds (including any retainage) be paid to the original contractor before the surety is obligated to pay the subcontractors. Therefore, if the property owner is retaining funds due to the original contractor’s breach, the surety is not yet liable.