Differences in Payment Bond Claims and Claims of Lien
I’m Chad Walker and I’m a partner with Regan Atwood, a Florida law firm based in Jacksonville with offices in Orlando.
What is a Payment Bond Claim?
I’ve talked about lien claims and today I’d like to talk about a related topic, which is payment bond claims. A payment bond is a substitute for a lien against property. Claims of lien and payment bonds are both about protecting a contractor’s or a supplier’s ability to get paid.
As many of you know, all public projects are bonded, federal, state, and local projects because you can’t lien public property as a matter of law. Some private projects are also bonded. In those situations the owner typically requires by contract that the prime contractor or general contractor obtain a payment bond so that the owner’s property won’t be subject to a lien.
What Steps Are Necessary to File a Claim?
The steps necessary to perfect a claim against the bond vary depending on whether the project is public or private, which is the reason I bring up that bonds exist on both types of projects. If the project is public, it also matters whether it’s a federal project, a federal owner, or whether it’s a state or local project. There are federal laws and state laws that establish notice requirements and deadlines for filing suit.
What Determines Deadlines for Bond Claims?
The federal law is commonly referred to as the Miller Act and in Florida the state law is commonly referred to as the Little Miller Act. Those federal and state laws define who must give notice to the surety and to the general contractor. They also specify the form of the notice, the deadline for giving notice and the deadline for filing suit. Bond claims have shorter deadlines and this is something important to keep in mind. Bond claims have shorter deadlines than other types of claims like breach of contract claims.
Our construction practice is not limited to litigating bond claims after a dispute arises, although that is a big part of what we do. We also counsel our clients on preserving their bond rights in the event that a bond claim becomes necessary. So we step in and assist during the project. We ensure that our clients understand when a notice to contractor is required, which is as many of you may know at the beginning of the project or within a certain time period after commencing work.
When Must a Suit Be Filed on a Bond Claim?
We also assist our clients in understanding when a notice of nonpayment is required and how the notice of nonpayment has to be served. Equally important, we assist our clients in understanding when a suit must be filed on a bond claim. All of that knowledge is part of the value that we bring to our clients as construction law specialists.
Once again, I’m Chad Walker. I’m a partner with Regan Atwood. I’m based out of our Orlando office and our firm also has offices in Jacksonville. I hope you found this information useful.