What are bond claims in construction?

In Texas, when you work on a public construction project, a mechanics lien cannot be filed against public property to recover unpaid invoices. Instead, you have to file a claim against the bond that was posted by the contractor. In this article, we will take a look at bond claims and how they work for you.

How do bond claims work in Construction?

When the owner of the construction project is a governmental agency, such as the state or city government, it is considered public construction or “public works.” Common examples are schools, sewers, road and bridge construction, universities, government property, public parks, utility work (if publicly owned), and bus stations. In these cases, the general (prime) contractor is required, in most cases, to secure a payment bond before work begins on the project.

The payment bond is secured through a third-party surety or insurer. The payment bond holds that surety company responsible for making sure the subcontractors and materials suppliers working on that project get paid. This way, the government-owned property does not get tied up in legal claims when contractors are seeking payment, such as with mechanics liens in private commercial construction. Instead, a subcontractor or materials supplier must file a bond claim against the payment bond to recover payment.

What do i need?

However, like a mechanics lienfiling a bond claim requires specific guidelines and timelines for successful execution. The following is the information necessary for filing bond claims. We recommend having this information ready and on-hand when you start EVERY public construction project, as it makes the filing process faster and easier when you are prepared.

• Project information: Name and address of the project. A legal description can be used, but it is not necessary.

• Contract: Name (or company name) and mailing address of the General (Prime) Contractor, the amount owed, retain-age amount, and type of agreement (written or oral).

• Bonding company (surety): Company name, address, and bond number (you can still file if you are missing the bond number, but you must have the surety company name and address.

• Work: Invoices, description of the unpaid work performed, and the amount owed for each month (individually).

As for timing, there are deadlines you need to know. For example, subcontractors with a direct contract to the general contractor should send bond claims notices with a notarized sworn statement of account to the general contractor and surety company no later than the 15th day of the 3rd month after the performed work. If you do not have a direct contract with the general contractor, the rules vary slightly. We have a complete schedule of requirements and deadlines on the Texas Easy Lien website under our FAQ’s.

What’s next?

As with mechanics liens, submitting bond claims typically prompts payment of money owed. However, after 60 days, if the amount is still in dispute, then it’s time to file a lawsuit against the bond. Your time limit to file a lawsuit is within one (1) year from the filing date of the bond claim notice. If you fail to file suit within this time, your claim against the bond will expire.

Ready to file your construction bond claim?

Texas Easy Lien provides all of the information and legal document you need to file bond claims quickly, easily, and affordably. Just answer a few simple questions online at www.texaseasylien.com to get started, and you will soon be on your way to recovering the money you’re owed.

Please note that these rules only apply to domestic government projects in the State of Texas and these rules do NOT apply to federal construction projects such as at places like Ft. Hood.

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