Guide to VA Payment Bond Claims

Thanks to guest blogger Christoper G. Hill for his contribution to our State Bond Claims Blog Series, addressing the topic as it relates to Virginia’s Little Miller Act. Christopher G. Hill is lawyer and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC, a LEED AP, and member of Virginia’s Legal Elite in Construction Law. He specializes in mechanic’s liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals.  Mr. Hill authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals.

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First off, thanks to Scott for the opportunity to discuss payment bond claims in Virginia.

At my Construction Law Musings blog, I have discussed the topic of mechanic’s liens extensively.  However, a mechanic’s lien may not be appropriate depending on the type of project that you work on.  For instance, in Virginia (as in most states), a contractor cannot place a mechanic’s lien on a public project.

In Virginia, the legislature has adopted the “Little Miller Act,” modeled after its federal counterpart.  The Virginia Act requires that a contractor post both a payment and procurement bond on any public project valued at over $500,000.00 (this change in value of contract was implemented in 2011).  These bonds secure just what you would think that they would,  i. e. payment of subcontractors and second tier subcontractors and performance of the work. The payment bond is a substitute for the lien rights that a subcontractor would have on a private project.

Essentially, the Little Miller Act allows a subcontractor or material supplier the right to collect under the bond if it has not been paid within 90 days of the date that the last material or labor was provided to a project. Once the subcontractor or material man shows that the labor or material was in fact provided, the claim is collectible absent some proof by the bonding company or contractor that it has some sort of payment defense (setoff, delay, etc.).

In order to take advantage of this powerful tool, and if you are a first tier subcontractor, you need only file a claim within a year of the last date of work/material supply if you are in direct contract with the general contractor and 90 days after your last work for which you claim payment was performed.

If you are a second tier subcontractor, you must send a notice to the general contractor within 90 days of the last date of work (another July 2011 change). As a practical matter, all subcontractors should also copy the surety on the notice in order to begin the pressure on the general contractor to get payments flowing.

Unfortunately, if you are more than two degrees of separation from the general contractor the Little Miller Act’s protection does not apply to you and you may be stuck with a contract claim against a subcontractor.

This brief overview should give the basics of Virginia’s Little Miller Act.  As always, consult with a knowledgeable attorney when making any sort of construction claim.

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