Home>Levelset Community>Legal Help>In Texas, after the 15th day of the 3rd month notice is sent to the prime contractor, what additional requirements are needed to make a claim against contract funds?
In Texas, after the 15th day of the 3rd month notice is sent to the prime contractor, what additional requirements are needed to make a claim against contract funds?
15th day of the 3rd Month Notice has been sent to the prime contractor and the governmental entity. I would like to know what additional steps can/need be taken prior to filing a civil suit.
1 reply
Mar 11, 2019
The rules and requirements related to bond claims in Texas, as well as claims against contract funds, can be confusing.
In Texas, a "bond claim" and a "claim on funds" are separate and distinct claims with differing requirements. On public projects in Texas, a claim may be made against the bond, against the contract funds, or against trust funds held by the general or subcontractor. The parties allowed to recover through each claim type are as follows: 1) Bond: Parties furnishing labor and/or materials to general contractor, subcontractor, or sub-subcontractor; 2) Contact Funds: Furnisher of labor and/or materials when original contract between the GC and the public entity totals less than $25,000; 3) Trust Funds: Contractors, subcontractors, laborers, or materialmen – no notice is required prior to initiating a lawsuit with respect to trust fund violations.
With respect to a bond claim - which is the claim that requires the 3rd-month notices, the time to initiate a lawsuit to recover against the bond is set forth by Sec. 2253.073. That section holds that:
"(a) A payment bond beneficiary who has provided public work labor or material under a public work contract for which a payment bond is furnished under this chapter may sue the principal or surety, jointly or severally, on the payment bond if the claim is not paid before the 61st day after the date the notice for the claim is mailed. (b) Suit may be brought under Subsection (a) for: (1) the unpaid balance of the beneficiary’s claim at the time the claim was mailed or the suit is brought; and (2) reasonable attorney fees."
So, a claimant must wait at least 60 days, but less than 1 year after the earlier of giving the notice of the claim or the completion of the project.
Prior to filing suit, a claimant can inform the interested parties of the intent to file suit to recover, noting specifically that a successful claimant is entitled to attorneys' fees. It is sometimes successful in reaching a conclusion and getting paid in order for the opposing party to avoid liability for attorneys' fees.