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Can a sub contractor file to collect a payment from our Bond - we are behind in paying after COvid 19

CaliforniaBond Claims

We are the GC.. In this Covid 19 we are behind on paying a roofing subcontractor He has filed a claim against our Bond We have given formal notice to give us time to work aging.. we have been shut down for 5 months now What should we do ? we have jobs coming up.. but waiting for building permits which are 5 months behind please advise Janis MGB INC

1 reply

Sep 22, 2020

Generally, a subcontractor is entitled to make claims to ensure they get paid what they're owed. If you owe your subcontractor for work they've done, that subcontractor can pursue payment regardless of whether the COVID-19 pandemic has been hard on your business. Ultimately, they have to look out for their business' interests, just like you have to look out for yours. With that being said - if the subcontractor going after your license bond without any sort of formal claim or judgment in hand, that should likely be unsuccessful. Typically, the surety will want some decision, claim, or violation before they'll be willing to pay out a claim. Though, failure to make payments could put a contractor in violation of CSLB rules which could serve as the basis for a claim against the license bond. If you've obtained a payment bond for this project and the subcontractor is looking to make a claim against that payment bond, then that claim may well be effective since the bond is present to protect against nonpayment or slow payment. In any event, if your subcontractor has grown impatient with your inability to pay, negotiating some payment plan might be in order to avoid formal claims against your business. With that in hand, the sub may be more patient.

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