Home>Levelset Community>Legal Help>What legal process do we need to take to force the bond to pay us & do we have rights to file a lien?

What legal process do we need to take to force the bond to pay us & do we have rights to file a lien?

MontanaPayment Disputes

This project has a bond, which our customer paid everything under the bond to the fund control except for $1000.00. We also billed this customer for a separate order related to this project as well. The fund control has now sent this money to the bond & now Hudson Surety has the funds that our customer paid to the fund control and has had these funds for a month or longer and is stating that they need a letter from our customer stating that they are done with the bond. We paid for the bond, but yet it is working against us. I am not familiar with this process as we have never done a bond on a project before. I am hoping you can give me some insight on what legally we need to do to get paid the money that the bond is holding and plus what is owed additional on this project that is not part of the bond. Project is in the State of Montana & we are in State of California

1 reply

May 10, 2018
That's a great question, and unfortunately, with the information presented above, I'm not sure I follow the situation. Ultimately, though, the surety is likely tied to the terms of the bond provided. If a confirmation letter is required from a paying party before funds can be released, that confirmation letter must be obtained. Thus, reaching out to the party from whom a that letter must be sent is a good idea. If they are unwilling to send a letter to initiate the payment process, other actions might be taken. First, sending a more formal demand letter could help. If that is ineffective, a Notice of Intent to Lien (if the project is private) or a Notice of Intent to File a Bond Claim (if a public project) might be sent - these documents let a customer know that nonpayment will not be tolerated, and that a lien or bond claim will be filed if payments aren't forthcoming. Further, informing a customer that they may be in violation of the state's prompt payment laws can also be effective - when a party fails to make payments according to their state's prompt payment laws, interest penalties and attorney fees might be assessed to the nonpaying party. In Montana, regardless of whether a project is public or private, making a claim under the state's prompt payment laws entails a lawsuit - and doing so might be better served as a last resort (much like a lien or bond claim). Of course, merely threatening such an action can be effective because of the penalties associated. A message such as a Notice of Intent to Make Prompt Payment Claim can get the warning across before actually filing suit becomes necessary. In any event, if push really comes to shove, a mechanics lien (if the project is private) or a payment bond claim (if the project is public) might be the most forceful method for recovery. In Montana, a claimant will only have 90 days after their last furnishing (or 90 days after a notice of completion is filed) to file a lien claim. For a bond claim, a claimant will have 90 days from the completion of the contract and acceptance of the project to file their claim. If you'd like to learn more about either remedy, check out our FAQs: Montana lien claims or Montana Bond Claims.
0 people found this helpful