Prime contractors on a public improvement project must furnish a payment bond to the public authority, and thereby agree “to pay all lawful claims of subcontractors, materialmen, and laborers for labor performed or material furnished in carrying forward, performing, or completing the contract; and agree and assent that this undertaking is for the benefit of any subcontractor, materialman, or laborer having a just claim, as well as for the state, political subdivision, district, institution, or agency." ORC sec. 153.54(B)(2).
In order to have a claim on a payment bond on a public improvement, the claimant must comply with ORC sec. 153.56. The claimant must satisfy the following:
An action may be brought for the amount owed to the claimant 60 days after the notice given to the sureties and within one year of the date that the project was accepted by the public authority.
Some owners may require prime contractors to furnish a payment bond. Such a payment bond acts to secure payment to lower tiered subcontractors and suppliers by the prime contractor or surety.
In the case of a private improvement, the restrictions contained in the payment bond and the contract with the owner govern. The owner and prime contractor can agree to limit the claimant’s rights to those that the claimant has under ORC Chapter 153, although that is typically not done.
Typically, the requirement for a claim under a private improvement bond are: