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Bond Claim or Mechanics Lien ?

We have a client who is a GC, who contracted us to do work for the University of Texas. The client is past due on payment and has stopped correspondence. We have filed an intent to lien and have had zero feedback in regards to that. We want to move forward with the lien. However- Zlien is telling me to file a "Bond Claim"- I have no knowledge of the GC's having a bond on the project. I do know that we do but we do not want to file on our own bond. I need to know if the bond claim is the accurate thing to do next or should I do a mechanics lien? Zlien is not giving me that option.

1 reply

Oct 31, 2018

Generally, public projects are subject to bond requirements since public property is shielded from being encumbered by a mechanics lien. Mechanics liens are not allowed to be filed against public property because the property may not be foreclosed upon and sold to satisfy the debt. Accordingly, since public policy requires providing protection to the parties furnishing labor or material to construction projects, bond requirements were implemented to substitute a different type of security in place of the improved property.

Texas statutes provide that:

"A governmental entity that makes a public work contract with a prime contractor shall require the contractor, before beginning the work, to execute to the governmental entity: . . .

(2) a payment bond if:

(A) the contract is in excess of $25,000, and the governmental entity is not a municipality or a joint board created under Subchapter D, Chapter 22, Transportation Code; or

(B) the contract is in excess of $50,000, and the governmental entity is a municipality or a joint board created under Subchapter D, Chapter 22, Transportation Code.

That payment bond is for the protection of parties with a direct contractual relationship with the prime contractor or a subcontractor to supply labor or material to the public project.

Note, however, that there are specific and strict notice requirements for public jobs just like there are for private jobs. Specifically, a notice must be provided by the 15th day of the 3rd month following every month unpaid materials and/or labor are furnished. If the party did not contract with the prime, a notice is required by the 15th day of the 2nd month following furnishing, in addition to the third month notice.

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