Just like sunblock protects you from getting a sunburn, preserving and leveraging mechanics lien rights protects construction businesses from the burn of going unpaid. On public construction projects in the Sunshine State, you can turn to a payment bond to protect against those harsh rays.
A payment bond is a surety bond established by a contractor to guarantee that everyone on a construction project will be paid. A surety bond could be thought of as a pile of money set aside to make sure that parties on a construction project get the money they’re owed. But recovering from that “pile of money” isn’t always easy. In the following article, we’ll explain all the steps to make a Florida bond claim on a public project.
Florida public works payment bond requirements
Many states have their own version of the Federal Miller Act, referred to as “Little Miller Acts.” These sets of laws require that on public projects that meet certain thresholds a payment and performance bond must be posted by the prime contractor. The purpose behind this is to insulate public property from mechanics liens. Instead, project participants who go unpaid on public works projects can file a claim against the payment bond.
The Florida Little Miller Act is codified under Florida Statutes §255.01 et seq. The general rule is that the bond requirements apply to any project over $100K that is funded by a state, county, local, or municipal government entity. With some minor exceptions. If this description matches the project that you’re about to start work on, keep reading. This is important information to help protect your payments.
How to make a Florida payment bond claim
When working on a Florida public works project, there are four basic steps to ensuring your right to make a claim against the payment bond. Let’s go through each step to ensure you’re doing everything you can to protect your company’s payments on a public project in Florida.
Step 1. Get a copy of the payment bond
This step is crucial. Whether working on a public project on any level (federal, state, local) or even on a private project where a bond is posted. Get a copy of the payment bond! This will give you the essential information you’ll need down the line in case you need to make a claim against the bond. So how do you get your hands on a copy?
Well the first, and simplest, method is to just request a copy from the GC. But sometimes contractors aren’t always as cooperative as they should be. Luckily, the Florida statutes have your covered. Under Fla. Stat. §255.05(1)(c), “A claimant may apply to the governmental entity having charge of the work for copies of the contract and bond and shall thereupon be furnished with a copy of the contract and the recorded bond.” This will give you both the general contractor’s information and the surety information, which is where certain notices and claims will need to be sent.
- Pro tip: a good practice is to send out this request for bond information along with the notice explained in step 2
Step 2. Sending a Florida Notice to Contractor
The next step in the Florida bond claim process is to send a preliminary notice, referred to as a Notice to Contractor. Under Florida law, only those who didn’t contract directly with the prime contractor (GC) are required to send a Notice to Contractor. That means that first tier subs do not have to send this notice, but it’s strongly recommended that you send a preliminary notice on every project; regardless if it’s required or not. The purpose of this notice is to inform the general contractor that you will “look to the bond for protection” in case of nonpayment.
A Notice to Contractor must be sent to the prime contractor either before work begins, or within 45 days of first furnishing labor or materials to the project. As far as how this notice needs to be sent, they follow the same requirements as a Florida Notice to Owner for private projects. By personal service, actual delivery, or by registered, Global Express Guaranteed, or certified mail. Note, that the notice needs to be served within 45 days.
But when is service considered complete? Well, if sent by registered or certified mail within 40 days of the date of first furnishing, then service is complete upon mailing. If sent by a different method or later than 40 days of first furnishing, then the contractor must actually receive the notice for service to be timely and complete. So best practice is to not only send this notice by registered or certified mail, but as early as possible. If you wait until later than 40 days to send your notice, and there’s some mailing or delivery complication, you’ll be out of luck!
Step 3. Sending a Florida Notice of Nonpayment
Now that you’ve secured your right to make a bond claim, it’s time to get to work. No one walks onto a project expecting payment problems, but it’s always best to be proactive instead of reactive. As the project progresses, and an invoice goes unpaid, it may be time for the next step; sending a Notice of Nonpayment.
Don’t let the name fool you! Although it says “notice” this is technically your claim against the bond. To properly make your claim, it needs to be sent within a certain window to be valid. The Notice of Nonpayment must be sent to both the prime contractor and the surety company after 45 days of first furnishing, but no later than 90 days after the last date of furnishing labor or materials to the project.
Similar to the Notice to Contractor, only those who didn’t contract directly with the prime contractor are required to send this. But again, we alway recommend transparency and communication, so there’s no harm in sending one anyways. But if we’re going by strictly legal requirements, 1st tier subs don’t have to send this either, and can file a lawsuit directly against the bond.
Step 4. Enforcing your claim against the payment bond
Sending a Notice of Nonpayment will typically be enough to get the ball rolling on your payment. Yes, the surety bond is where the money will be coming from, but it’s the GC who has to post the bond, and will ultimately be liable to paying the price. However, if the situation has reached the point of no return, it may be time to file a lawsuit against the bond for payment.
The deadline to file an action against the bond is one year after the claimant last furnished labor or materials to the project. If the claimant is required to send both notices that we previously discussed, both of them must have been sent before filing the lawsuit.
One year is a fair amount of time to try and reach some sort of payment agreement. But there’s a catch. This one-year timeframe can be significantly reduced by the prime contractor if they file a Notice of Contest of Claim Against the Payment Bond in the county clerk’s office in the county where the property is located. Once they file this notice, they are required to serve it on the claimant thereafter. When the claimant receives this notice, they will have 60 days from receipt to institute a suit to enforce their claim against the bond. If a lawsuit isn’t initiated within the one-year deadline (or 60 day if a Notice of Contest is filed and served) the claim against the bond will be extinguished.
And that’s the long short of everything you need to know about securing and enforcing a Florida bond claim on a public works project! But before we end things, let’s quickly review how bond waivers work on public projects in Florida.
Special note on Florida bond waivers
The laws governing Florida bond waivers are very similar to the rules on Florida lien waivers. First and foremost, there are certain statutorily provided forms that should be used to effectively waive your bond rights. However, if the parties agree to use a different form they can, but be sure to read the terms of that alternative waiver carefully! That being said, a contractor can’t force you to use a different form. So if there’s some dangerous language in that waiver, insist on using the statutory ones.
Also like FL lien waivers, the forms provided are unconditional; one for progress payments, and one for final payments. Meaning your right to make a bond claim will be waived whether you’ve been paid or not. To counter this, Fla. Stat. §255.05(2)(e) states that “A claimant who executes a waiver in exchange for a check may condition the waiver on payment of the check.” That means by simply adding a statement such as “this waiver and release is conditional and effective only on the lienor’s receipt of payment from the financial institution on which the following check is drawn” and some information regarding the check (i.e. the maker, amount, and who it’s payable to) can convert the waiver into a conditional one. That way, the waiver isn’t valid until the check clears!
- You can download all of these bond waiver forms for free on our Florida Construction Payment Resources page
- Learn all about getting paid for public work in Florida with How to Get Paid on Florida Public Projects