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Does a performance bond on a project prevent an unpaid subcontractor from filing a lien?

My company worked on a project and we were not paid. I file a claim against the performance bond but they denied the claim. So I file a mechanic's lien on the building. Now, the attorney for the owner/building is trying to bond-off the lien by claiming that the lien is illegal. They are stating that the performance bond protects the project/building against all liens. Is this true?

2 replies

Jul 4, 2020

A performance bond protects the owner, not potential lien claimants. A payment bond protects claimants. Usually both bonds are issued for the Project, so there should be a payment bond. If this is a public project then your lien would be invalid. You should move quickly to ensure that you make a claim against the payment bond. If it is a private project, a payment bond would not automatically invalidate your lien claim. If the owner is threatening to "bond off" your lien, that is great, because pursuing a claim on a lien bond can be easier than enforcing a lien.

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Jul 8, 2020

Hello, Normally a performance bond will pay for the work to be completed if the general contractor abandons the project. A payment bond will make sure everyone on the project receives payment. If there is a properly filed payment bond, you would still file your lien and send the bond company notice. You would sue the bond company to enforce your lien, not the owner. Feel free to reach out directly if you have any further questions. Karalynn Cromeens Managing Partner 8431 Katy Freeway Houston, TX 77024 Tel: (713) 715-7334 www.TheCromeensLawFirm.com

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