We have a new customer from Tennessee performing work for the Memphis Gas and Light Co and are wondering if we have lien rights.
Oct 31, 2018
Generally, public projects are subject to bond requirements since public property is shielded from being encumbered by a mechanics lien. Since public policy is to provide protection to the parties furnishing labor or material to construction projects, the bond requirements were implemented to substitute a different type of security in place of the improved property.
Tennessee statutes provide that:
"No contract shall be let for any public work in this state, by any city, county or state authority, until the contractor shall have first executed a good and solvent bond to the effect that the contractor will pay for all the labor and materials used by the contractor, or any immediate or remote subcontractor under the contractor, in such contract, in lawful money of the United States. The bond to be so given shall be for twenty-five percent (25%) of the contract price on all contracts in excess of one hundred thousand dollars ($100,000).
However, this requirement does not apply to contracts of one hundred thousand dollars ($100,000) or less.