If you need help with payment bonds, this page compiles helpful articles about payment bonds in Construction. 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. Browse the articles below to learn how to use payment bonds to get paid on a construction project.
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.
If you can’t find what you’re looking for below, you can ask a question about payment bonds for free at the Expert Center. There, you can get some legal advice from a construction attorney or another payment expert.
Contractors are often required to provide insurance and/or bonds for licensing or for specific projects. Both provide protection for contractors and their customers, but the way they protect and who...
When questions or issues arise on a construction project, everyone needs to get on the same page. An RFI, or Request for Information, is an essential tool for effective communication....
When a contractor secures a construction bond, the surety agrees to cover claims against the bond up to a specific limit. Any time there’s a change to a project that...
Public works projects are expected to decline through the rest of 2020 and into next year. Due to the unique nature of the funding for public projects, pandemic shutdowns have...
While down payments or upfront deposits are increasingly uncommon on construction projects, some contractors or suppliers do request them. When a payment is made in advance, before materials or work...
Subcontractors and suppliers can get a lot of pushback when they send a notice of intent to lien, or actually file a mechanics lien claim. The GC or property owner...
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...
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,...