Payment bonds are a part of many (if not most) construction projects. Payment bonds often are required under state (or federal) law for public projects. But these bonds also are commonly required on private projects when the owner demands it.
A payment bond is an agreement between a general contractor and surety for the surety to guarantee the payment of labor and material costs on the project. The existence of a payment bond provides a measure of security for subcontractors and suppliers. Even if the general contractor cannot or does not pay, a subcontractor or supplier can file a claim for payment from the bond.
But subcontractors and suppliers should understand the deadline they face if they try to collect against the payment bond.
Subcontractors and suppliers may be most accustomed to filing mechanics’ liens against the project to remedy nonpayment. Depending on the state where the project is located, an unpaid sub could have several months to file a lien or notice of lien. But a filed mechanics’ lien is not a claim against the payment bond. More importantly, a mechanics’ lien will not stop the clock from running on the deadline to file a claim against the bond. It is common for payment bonds to require that claims against the bond be filed within 90 days after the last day of providing service or materials.
So while it might be a good idea to also file a mechanics’ lien, keep your eye on what the payment bond requires. Courts will uphold the 90-day claim period, and if you miss this deadline then you miss your opportunity for payment under the bond.