A payment bond acts like an insurance policy, guaranteeing that contractors and other sub-tier parties on a project will receive payment. The bond also protects the property from mechanics lien filings. If a contractor or supplier doesn’t receive payment, they can file a bond claim, rather than a mechanics lien.
Typically, the prime contractor will purchase a bond from a bonding, Surety, or insurance company. Often, the lender will include a contract provision requiring the prime or general contractor to bond a project. In most cases, it is only the prime contractor who is required to obtain a payment bond.
Bonds are often required for public construction projects. For federal building projects, the Miller Act regulates the process of payment bonding for contractors. Many states utilize the Miller Act as a guideline for their own rules for payment bonds on government projects.
To maintain the right to file a bond claim, contractors need to meet filing deadlines and notice requirements specific to their project location. Improper or late bond claims may be challenged, delayed, or denied.
While a mechanics lien filing is secured by the physical property, a bond claim is secured by the payment bond. In a lot of ways, since the foreclosure process can be so cumbersome, claims against payment bonds can be cleaner, simpler, and faster than filing a mechanics lien claim.
The Washington Little Miller Act ensures that project participants get paid on public construction projects. On projects of a certain size, the prime contractor must post a payment bond on...
In Michigan, the Little Miller Act provides protection against nonpayment to those working on state or local government-funded construction projects. The Act requires that the prime contractor post a payment...
Payment bonds can provide property owners with important protection against the possibility of mechanics liens being filed on their property. They replace a lien’s interest in the property with a...
For those who provide construction labor or materials to a public works project in the state of Nevada, the Little Miller Act ensures that payment will be made. Like every...
For contractors working on a state or local public construction project, the state law will likely require a payment bond. When a subcontractor or material supplier is faced with nonpayment,...
Many construction projects today require that contractors provide bonds. Construction bonds are protection for the owner against non-payment, lack of performance, company default, and warranty issues. There are several types...
When payment bond thresholds rise, it's even more important for subcontractors and suppliers to send preliminary notice and foster healthy payment chains.
Mississippi subcontractors and suppliers take note: contractors on private projects can now use payment bonds to keep mechanics liens off of their projects.
Payment bonds are a type of surety bond that is typically acquired by the prime contractor on a public works construction project. Learn everything you need to know about these...
Just like for bond claimants, bond defenders should also make it routine practice to retain information that would be beneficial in the event a claim is made. Just like the...