Construction & Performance Bonds

Bond claims are generally used when you’re working on a government construction project. This could be a project for your local municipality or when you’re doing work at the state level. When working on these types of projects, your payment is generally ensured through a bond, so instead of filing a mechanics lien, you file a bond claim.

WHAT IS A BOND CLAIM?

In many ways, bond claims are similar to mechanics liens. They’re used by contractors and materials suppliers to construction projects, are fairly inexpensive to file, and tend to be very effective. A surety company, usually an insurance company that deals in bonds, is responsible for paying for the project in the event the responsible party does not, so there is a strong incentive to make sure you get paid.

WHAT IS THE DIFFERENCE BETWEEN A BOND CLAIM AND A MECHANICS LIEN?

A bond claim is a claim against a surety bond that has been provided for the purpose of ensuring payment, generally by the prime contractor. These are most common when working with governments and public projects. It provides a way to ensure subcontractors can be paid without having to file a lien against government property or a lawsuit against the government. This process, involving a third party that has the finances to cover the project and is required to do so, means you’re much more likely to get paid for your efforts. A mechanics lien is a lien on the title of the property where work was performed. This applies to work performed or materials provided to a private residential, business, or commercial project. A mechanics lien is designed to provide the landowner an incentive to pay for work performed to ensure their property title remains free and clear.

THE PROCESS

The process of filing a bond claim is a little different from the mechanics lien process.

File Your Bond Claim:

You start by filing your bond claim. While this sounds simple, there are a number of complex requirements that vary from state to state. You have to comply with each of these requirements in order to make sure your claim is correct and can be enforced. States also have different timelines that cover when the bond claim is due and where they need to be filed.

Submit Your Backup Materials:

When you file a bond claim, the surety company will probably want to see some sort of proof of outstanding payment and collect a sworn statement from you. You’ll need to gather this material for the company quickly to keep your claim moving forward.

Follow-up

Once you’ve filed your information, the surety company will then reach out their customer to notify them of your claim. They’ll request information about your work and claim and try to see if the problem can be resolved. This is often where the process slows down, so be sure to follow up with the surety company regularly and encourage them to approve your claim.

Enforce Your Claim:

If your claim is denied or payment is taking an unreasonable amount of time, you need to start thinking about filing a lawsuit against the surety company. While this is a last step and will certainly cost you more out of pocket, it will certainly get their attention.