When it comes to public works construction projects, the rules regarding payment assurances are different than those for private commercial jobs. In this article, we’ll explain what the laws are and how they work for subcontractors.
Please note that this information does not apply to Federal projects, there is a different bond process for Federal projects.
What is a “Public Works” Project?
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” project. Common examples are government offices, sewers, road and bridge construction, schools, universities, government property, public parks, utility work (if publicly owned), and bus stations.
Generally speaking, liens are not allowed to be filed on publicly owned property, so a mechanics lien is not an option for subcontractors on public construction projects. Instead, the law protects subcontractors from non-payment with a construction bond called a payment bond. The payment bond serves as a guarantee (from a surety/insurer) that the prime contractor will pay all subcontractors, laborers, and suppliers for services and materials provided. Fortunately for the subcontractors, the prime contractor is required, in most cases, to secure this bond before work begins on the project.
What is a Construction Bond Claim?
In place of a mechanics lien, Texas construction law provides bond claims to protect subcontractors from non-payment on public works projects. A bond claim informs the prime contractor and surety that a subcontractor has not been paid for work performed. If a bond claim is properly submitted, then there are guaranteed funds available to satisfy a subsequent judgment. A bond claim is available to any subcontractor or sub-subcontractor who provided work under a written or oral agreement and did not receive payment for labor or materials supplied.
Construction Bond Claim Requirements
Under Texas construction law, there are very specific requirements for filing a construction bond claim – much like a mechanics lien. The requirements include detailed project information, as well as deadlines for submitting the bond claim paperwork. Let’s take a look at the project details (which we recommend compiling before work begins on the project):
• Project Information: Owner, name of project, project address (or legal property description)
• Contract: Name (or company name) and mailing address of the General (Prime) Contractor, the amount, retainage amount, and type of agreement (written or oral)
• Bonding company (surety): Company name, address, and bond number (you can still file if you have the surety company name and address, but not the bond number)
• Work: Invoices, description of the unpaid work performed, and the amount owed for each month (individually).
Next, submit the paperwork by the required deadlines. For example, subcontractors and materials suppliers should send notice of a bond claim with a sworn statement of account to the surety company and the prime contractor no later than the 15th day of the 3rd month after the performed work. You can find a complete deadline schedule under the FAQ section of our website, https://www.texaseasylien.com/faqs/.
What happens after I file a construction bond claim?
Typically, filing the bond claim will result in payment of money owed or it will at least preserve the money for you so if you prevail in a lawsuit you can get paid. 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 do so is within one (1) year from the filing date of the bond claim. If you fail to file suit within this time period, your claim against the bond will expire.
We’ve got you covered!
Filing a construction bond claim does not have to be complicated – despite the many requirements and deadlines. We make it easy! The Texas Easy Lien bond claim documents include everything you need, plus detailed instructions on what to do, where, and when.