Payment bonds serve as security blankets on public construction jobs. Since you can’t file a lien against public property (like a government-owned building), payment bonds are typically present to serve as a replacement for lien rights, should a payment issue arise on the project. If a subcontractor or supplier goes unpaid, instead of a lien, that claimant can make their claim against the payment bond.
However, before that claim can be made against a surety bond, it’s pretty important to know who the surety is — how else will you know where to send your claim? Further, a claimant may need to send notice before making a claim, too.
Luckily, claimants are pretty much always entitled to a copy of the payment bond. But a claimant typically needs to request it, first.
Why It’s Important to Get a Copy of the Payment Bond
There are two primary reasons why it’s important to have a copy of the payment bond on a state or county public works project. For one, it identifies the bonding company for you. Further, it specifically identifies the terms of the bond. Note, of course, that the bond terms are often set by law.
Knowing the identity of the surety bonding company is probably the most important part of making a bond claim. Deadlines and notice requirements are crucial, but if a claimant doesn’t know where to send that bond claim, then the timeframes and notice itself are irrelevant. By getting the bond information at the start of the project, it will be much simpler to meet a bond claim deadline without any last-minute issues. Plus, requesting the information from upper-tier parties lets them know that you know your payment rights. This can help put you at the front of the line when it comes time for payment.
The terms of the bond are also important. Failing to comply with the terms of the bond can compromise your entire bond claim. Therefore, once you get a copy of the bond it’s important to review it and make note of your potential obligations under the bond.
How to Get a Copy of the Payment Bond Information
Now that you know you have the right to payment bond information you may be thinking: ‘How do I get my hands on it?’ The answer is simple: Just ask for it.
Each state has slightly different procedures for requesting a copy of payment bonds. But, generally, a formal written request to your customer, the GC, and/or the surety will do the trick. Keep in mind, though, a formal message doesn’t mean it has to be an adversarial one, especially when sent at the start of a job.
In most cases, written requests must be sent by certified mail or certified mail with return receipt requested. In a minority of cases, the requesting party must actually provide a notarized affidavit affirming that they are furnishing to the project. Be sure to check your state’s statute regarding the mailing requirements.
In states where preliminary notices are required on state construction projects, it’s a good idea to actually include this request within that notice. Whenever a preliminary notice on a public project is ordered from zlien, we often have that formal request for information included in the notice form. This ensures that the potential claimant gets a copy of the payment bond at the very start of their work on the project.
You’re Entitled to Payment Bond Info, by Law
Sharing information and maintaining open lines of communication are the seeds of a healthy project. More importantly, doing so helps build trust while also establishing some accountability. And finally – you’re entitled to this information, by law! Exerting this right will not only make the payment process fairer, but it will also make your life easier if a dispute pops up down the road.