I am a credit manager and am going to send a NTO for the project and I'm being asked if the project is private or public
Mar 27, 2018
That's a tough question, and determining whether a project is "public" or "private" must be made on an individual project basis. However, looking to the basics of mechanics liens and bond claims can help to sort things out - even when it's well before the time to file a mechanics lien or a bond claim. Generally speaking, mechanics liens are available for those who provide construction labor and/or materials on "private" projects. On projects where the underlying property is owned by a public entity, mechanics liens are not available because private parties may not encumber public property. Since a private party cannot take an interest in land that is publicly owned, Little Miller Acts were passed that provide an alternative remedy - the ability to file a bond claim to enforce payment from a surety. Thus, whether a lien claim or a bond claim is appropriate will typically rely on whether a project's underlying property is owned by a private person/entity, or a public entity. If private - a lien claim will likely be able to attach; if public - a bond claim would be more appropriate. However, just because there is some public presence on a project does not automatically mean that a bond claim will be the correct remedy (or that bonds are even present on the project, at all). This may seem like putting the cart before the horse, but bear with me. In states like Florida, a different notice may be required for a lien claim (in Florida - NTO) and a bond claim (in Florida - Notice to Contractor). So, determining whether an eventual payment claim will be a bond claim or a lien claim is crucial at the outset for determining whether a project is "public" or "private." In situations where it's truly unclear, sending both a notice required to preserve lien rights and the notice required to preserve bond claim rights would be an effective way to split the difference. While one of the two would likely be ineffective, there's no harm in sending extra notice and covering all potential bases.