Just like sunblock protects you from getting a sunburn, preserving and leveraging mechanics lien rights protects construction businesses from the burn of going unpaid. On public construction projects, you can turn to a payment bond to protect against those harsh rays.
A payment bond is a surety bond established by a contractor to guarantee that everyone on a construction project will be paid. A surety bond could be thought of as a pile of money set aside to make sure that parties on a construction project get the money they’re owed. But recovering from that “pile of money” isn’t always easy.
In the following article, we’ll explain how to make a payment bond claim on a Florida construction project.
How To Make A Florida Payment Bond Claim
All 50 states require that the prime contractor on a public project procure a payment bond from an accredited surety with a specific value. In Florida, the payment bond must equal 100% of the price of the project.
Florida bond claim rights typically cover anyone working on a construction project. Suppliers of labor and/or materials, subcontractors, and sub-subcontractors are all protected. (Please note, however, for all you working under a construction management or design-build contract, if the bond amount does not include the cost of the non-construction or design services, your work won’t be covered by the bond.)
What to Look Out For
Watch out for sharks in the water. There could be contract clauses lurking in the depths trying to limit your ability to make a bond claim. By signing a contract like these, you might be agreeing to work without the security of a potential claim if you go unpaid. It’s like jumping into shark-infested waters without a cage around and hoping not to get bit.
Making a Claim Against a Payment Bond
Some states require that a preliminary notice must be sent out prior to making the bond claim. In Florida, only parties who don’t have a direct contract with the general contractor have to send a preliminary notice by certified mail within 45 days of the first furnishing of labor and/or materials on a project.
If required notices have been sent and payment isn’t made, you may file a claim against the bond. Making a bond claim is kind of like filing a mechanics lien in that you have specific deadlines, form, and service requirements.
For a bond claim in the state of Florida, the claim must be delivered within 90 days after your last furnishing of labor and/or materials to the project. It’s critical that you not miss this deadline as it could invalidate your claim.
Who Does the Claim Go to?
Each state requires different parties to receive the bond claim. In Florida, claimants need to send the bond claim to the general contractor and the surety. If you want to, a copy of the claim can also be sent to the contracting public entity.
What Do You Need in Your Claim?
Florida bond claims must include a notice that labor and/or materials have been furnished to the jobsite and that you have not been paid. It’s advisable to also include a description of the project and services/and or materials furnished, and the identification of the general contractor, surety, and the amount owed.
Once you have everything together, it’s time to send the claim. Florida requires the claim to be sent by registered or certified mail, personal service, or another manner acceptable for the service of process.
After the bond claim is received, in most cases the surety will require more information and additional supporting documents before the claim is accepted and paid or denied. The rule here is to follow up with the surety and monitor the progression of the claim. It’s all about the details and making sure your bases are covered.
What Happens If the Surety Doesn’t Pay Your Claim?
After everything is sent off, it’s time to hurry up and wait. However, you should be thinking ahead while waiting. It may be a good idea to start pulling together and supporting documents and information that support your claim in anticipation of the surety’s response.
If payment still doesn’t come, filing a lawsuit may be in your near future. Generally, Florida state law will allow you to initiate a lawsuit within 1 year of your last furnishing of labor and/or materials to the project. The time frame could be shorter depending on whether or not the general contractor files a notice of contest of the payment bond claim. If the general contractor files this notice, the time frame for a suit could be significantly shortened. In this case, the lawsuit must be initiated within 60 days of the date on which the notice of contest is mailed to you.
Free Resource – Bond Claim Deadlines
We’ve compiled lists of deadlines for sending notice, and filing and enforcing a bond claim in all 50 states. Take a look to ensure you secure payment on every project.
Click the button below your role to download a chart of notice and bond claim deadlines for all 50 states.
Download a free Florida Claim Against Bond form template
When making a claim against a payment bond, it’s the details that make a difference. It could be the difference in getting burned and not, so don’t forget the sunscreen at home!