When it comes to getting paid on a construction project, Texas just does things a little differently. This certainly includes notice requirements for mechanics liens – at this point, we’ve written about the Texas monthly notice requirements more times than we can count. It should come as little surprise then, that Texas public projects also have some tough notice requirements. What’s more, the bond claim process on a public construction project in Texas operates unlike that in any other state.
Keep reading to find out why this is so.
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Quick Review: Public vs. Private Projects
Before we get too far, let’s quickly review the 2 major categories of construction projects.
In the world of construction, one of the fundamental ways that projects are classified is by project type. Generally speaking, all projects fall into one of two basic categories — a project is either PRIVATE (meaning the work is being done on privately-owned land or property) or PUBLIC (where the project is government-owned).
There are several subcategories within each of those broad segments. (For example, a private project can be commercial, residential, etc.) And a public project is usually either a Federal project (meaning that it’s under the auspices of the U.S. government) or a State project (meaning that the government agency responsible for the project is either a state, county, or municipal government or agency).
Broadly speaking, if there is a payment issue on a construction project, the mechanics lien remedy is available on private projects, and the bond claim remedy is available for public projects (whether state or federal).
PRIVATE PROJECTS = MECHANICS LIENS
PUBLIC PROJECTS = BOND CLAIMS
Texas Monthly Notices for Public Projects
Preliminary notices are never required on federal construction jobs. And in many states, no preliminary notice is required prior to making a payment bond claim. On a state project in Texas, however, preliminary notice may be necessary prior to submitting a bond claim.
For parties who have not contracted with the prime contractor on a project, a preliminary notice must be sent (and it must be sent in a way that very similar to the notice requirements on Texas private projects). These notice requirements only apply to those who are not under direct contract with the prime contractor, though (i.e. a sub-subcontractor or a supplier to a subcontractor).
For those that must send these notices, they must send the notice no later than the 15th day of the 2nd month after each month in which labor was performed or material was delivered and the claimant went unpaid. The requirements for such a notice can be found in Sec. 2253.047(c) of the Texas Little Miller Act or you can track them at our Texas Public Project FAQs.
Now, technically – a 3rd month “notice” is required as well. However, this notice actually serves as the bond claim itself.
Bond Claims on Texas Public Projects
Still reeling from that last sentence? I don’t blame you – at first glance, it will throw you for a loop. When discussing a bond claim in any other state besides Texas, normally, one single claim is made and the deadline is clear.
Since Texas can’t help but be different – Texas bond claims are made on a rolling basis just like Texas notices. If you’re familiar with Texas lien claims, you’ll notice that the process is very different – for liens, monthly claims are not required. Only monthly notices. Note that this deadline applies to all bond claimants – even those under contract with the prime contractor.
Anyway, a Texas “bond claim” is called a Notice of Claim. This “notice” is sent in a very similar manner to the monthly notices described above, which again, understandably causes a lot of confusion. Those making Texas bond claims must send their claim no later than the 15th day of the 3rd month after each month in which the claimant furnished labor and/or materials for which there’s an unpaid balance. The notice must be sent to both the GC and the surety – which is great because you should never surprise the surety if you want your bond claim to get paid.
Additional Steps May Be Required
As a reminder – the process doesn’t always end with merely submitting a bond claim. If a bond claim is made, and payment still isn’t forthcoming – enforcing the bond claim via a lawsuit may be in order. In Texas, a suit against the bond must be made less than 1 year after either the sending the Notice of Claim (read: bond claim) or 1 year from the completion of the project, whichever is earlier. Also, note that such an action cannot be filed until at least 60 days after a Notice of Claim is made. Obviously, this creates multiple moving targets, so keeping your dates and deadlines organized is a must.