In Michigan, the Little Miller Act provides protection against nonpayment to those working on state or local government-funded construction projects. The Act requires that the prime contractor post a payment bond to ensure payment to the subcontractors, materials suppliers, and other project participants. If unpaid, any sub-tier construction party can make a claim against the bond to recover payment.
This post will take you step-by-step through making a payment bond claim in Michigan to ensure you get paid what you’ve earned.
Step 1: Be sure that you have the right to make a Michigan bond claim
Clearly, the first step to making a Michigan payment bond claim is to be sure that the project is bonded and you have the right to even make a payment bond claim.
Is a payment bond required on the project?
Under the Michigan Little Miller Act, any public works project whose total contract amount is $50,000 or more is required to have a payment bond and performance bond posted by the principal contractor. The amount of the payment bond must be at least 25% of the project cost.
Is your work protected under the Michigan Little Miller Act?
Any party who furnishes labor or materials to a direct contractor or subcontractor can make a claim against the payment bond. This includes material suppliers, laborers, equipment lessors, etc. However, anyone lower than the third-tier on the contracting chain will not have the right to make a claim.
Step 2: Send a Notice of Furnishing
In Michigan, a preliminary notice is referred to as a Notice of Furnishing. Anyone who didn’t have a direct contract with the general contractor will need to send written notice to secure their right to make a Michigan bond claim. That means all second-tier subs and suppliers need to send notice to the GC within 30 days of first furnishing labor or materials to the public project. The notice should include:
- Description of the labor or materials being provided
- Hiring party’s contact information
- Description of the property
As far as how this notice should be sent, Michigan’s notice requirements are rather lenient. The statute requires it to be sent by certified mail, but actual receipt of notice isn’t necessarily required. However, if sent by means other than certified mail, it may still be proper notice if it is actually received.
Step 3: Send a Notice of Intent to Make a Bond Claim
If you’ve been dealing with slow or non-payment, it may be time to consider making a bond claim. But there is one more thing you can do before sending your claim, and that’s sending a Notice of Intent to Make a Bond Claim. This isn’t a required notice, but it’s incredibly effective at inducing payment. You can consider it a final warning shot sent to the public entity, the GC, and the surety. It essentially states that if money or a payment plan isn’t forthcoming in x amount of days, then you are ready to make a claim against the payment bond.
Step 4: Make your Michigan payment bond claim
When do I need to send the bond claim?
In order to make a valid claim against the payment bond, a Michigan bond claim must be made within 90 days of the claimant’s last date of furnishing labor or materials to the project. Failing to make the claim within this time frame will be fatal to the right to make a bond claim. As far as delivery method is concerned, the same rules for the preliminary notice apply here. It should be sent by certified mail, but any method will likely be valid as long as actual receipt can be proved.
What should I include in the bond claim?
The state of Michigan doesn’t have too many strict requirements for the form and contents of the payment bond claim. But, at minimum, this information should be included:
- The unpaid balance being claimed
- Hiring party’s contact information
That’s it! However, it might be beneficial to identify the property being improved, and a brief description of the labor and materials provided to the project.
Who should I send the bond claim to?
Under the Michigan bond claim laws, the only parties that must receive your bond claim is the general contractor and the contracting government entity. However, the more people who are aware of your payment issue, the more attention your issue will get. This is particularly true if the claim is sent to the surety company as well. Getting the surety a copy of the bond claim can help speed up the payment recovery process.
Next steps after sending a bond claim
If you followed these 4 steps, then congratulations. You’ve successfully made a Michigan payment bond claim. Hopefully, this is enough to get you paid. But, if the claim alone doesn’t loosen the grip on your money, it may be time to take additional measures.
File an enforcement action
Usually, it doesn’t come to this point. But sometimes a lawsuit is necessary to get the money you’ve earned. The window to file a Michigan bond claim is at least 90 days after the last date of furnishing labor or materials, but no later than 1 year from the date final payment was made to the prime contractor. If this timeframe is missed, then the bond claim will no longer be enforceable.
It’s important to remember, that this is a full lawsuit that costs both time and money. Before proceeding to enforce your claim, you should contact a local construction attorney to help guide you through the enforcement process.