When it comes to collecting past due payments for work on commercial construction projects, the first step is to determine if the job is private construction or public construction (otherwise known as public works). If it’s a private construction project, you can use the mechanic’s lien process to collect your money.
If it’s a public works project, or a project owned by a governmental agency, there is a different set of rules for collecting past due invoice payments. Common examples of public works projects are schools, sewers, road and bridge construction, universities, government property, public parks, utility work (if publicly owned), and bus stations – basically anything owned by the city or state or government. In these cases, the general or prime contractor is required, in most cases, to secure a payment bond before work begins on the project. This payment bond is your payment protection.
What is a payment bond?
The payment bond is secured through a third-party surety company who holds the funds responsible for making sure the subcontractors and materials suppliers get paid. This way, the government-owned property does not get tied up in legal claims when contractors or material suppliers are seeking past due payment.
What are bond claims?
A Texas bond claim is how a subcontractor, sub-subcontractor, or material supplier communicates that the work agreed to in a contract (oral or written) has been completed, but the payment has not been made. The surety (bonding company) is now liable for that debt.
Like the mechanics lien, the Texas bond claim comes with specific deadline and form requirements, including notices and a sworn statement of account. Outlined below is the information you need to prepare bond claim paperwork. We recommend having this information ready and on-hand when you start EVERY public works project to make the payment recovery process faster and easier when needed.
• Project information: Name and address of the project. A legal description is not necessary for a bond claim.
• Contract: Name and mailing address of the General (Prime) Contractor, the amount owed, retainage 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 do need to have the correct surety company name and address.)
• Work: Invoices, description of the unpaid work performed, and the amount owed for each month (individually).
What are the deadlines for filing Texas bond claims?
The bond claim deadlines and notice requirements are similar to those of the mechanics lien, in that subcontractors must send notice of a bond claim with a sworn statement of account no later than the 15th day of the 3rd month after the month the work was performed.
In the case of sub-subcontractors and material suppliers working for a first tier subcontractor, an early notice (or second month notice) must be sent to the general contractor before sending notice to the surety company (along with a sworn statement of account). This second month notice can include a copy of your outstanding invoice(s) with a signed cover letter detailing the amounts that remain unpaid.
We’ve created an easy to follow table that specifies notice and Texas bond claim deadlines for each month according to the role you played in the construction project.
How do I file a construction bond claim?
When preparing the construction bond claim paperwork, the sworn statement of account must be notarized and sent (along with the bond claim notice) to the general contractor and surety company via certified mail with return receipt requested. We recommend keeping the return receipt with your files.
Submitting the bond claim notice and sworn statement of account will typically prompt 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.
Although the process to file a construction bond may seem complicated, Texas Easy Lien provides all of the information, legal documents, online notarization, and e-filing necessary to pursue a bond claim quickly, easily, and affordably. Just answer a few simple questions 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.