You probably know that payments bonds are a great way to increase the likelihood of getting paid for the work you perform or the materials you supply on Federal, state and local government projects in Georgia. But, did you know that private construction projects can also have payment bonds?
Public Works Projects and Payment Bonds
Since public policy prohibits a supplier or a subcontractor from filing and foreclosing a claim of lien against a public project, the federal and state governments have established a bonding procedure to protect the interests of construction professionals who are not paid for their work and supplies. All construction contracts in excess of $100,000 for any public works located in Georgia (this includes Federal public works projects as well as State of Georgia and local municipality public works projects) must be covered by a payment bond. Payment bonds may also be issued for smaller public works projects. Because these federal, state and local construction projects are governed by statutes, payment bond claims against government projects are (largely) governed by statutes. Federal projects, for example, are governed by The Miller Act. The State of Georgia has enacted two separate code sections relating to payment bonds: one covers construction projects owned by the State of Georgia, and one covers construction projects owned by counties and local municipalities in Georgia (collectively, these are referred to as the Little Miller Act because it mirrors its federal counterpart). For more information, on public works payment bonds, please click here.
Private Construction Projects and Payment Bonds
Government public works projects require payment bonds by statute, but there is no requirement that privately-owned construction projects must be covered by a payment bond. Nonetheless, an owner or a general contractor may also include a payment bond. If so, that is probably great news for any sub-contractor or supplier working in Georgia! However, since payment bonds are not required by statute, they are not as regulated by statute as the public works payment bonds. Instead, they tend to be governed by contract; specifically, they are governed by the contract between the surety (the insurance company providing the payment bond, the obligee (the person requiring the bond), and the obligor (the person performing the construction contract). What does this mean? It means you should obtain a copy of the payment bond as soon as possible and read it! It will set out the method(s) of making a claim as well as the deadlines.
Payment Bonds and Mechanics and Materialmen’s Liens on Private Projects
Even if the private project on which you are working or supplying materials in Georgia is covered by a payment bond, then you are still allowed to file a claim of lien if you are not paid. This is a boon to sub-contractors and suppliers as it gives them multiple options for collecting the money they are owed.
Needless to say, payment bond claims on public works projects, payment bonds claims on private projects, and mechanics and materialmen’s lien claims each have their own requirements and deadlines. If you have provided labor or materials on a project but you haven’t received payment, please contact a construction lawyer in Georgia who can assess your claim and help you navigate the requirements and meet the deadlines to file your payment bond claim and construction liens.
This is a general information article on Georgia construction law and should not be construed as legal advice or a legal opinion. The content above has been edited for conciseness and additional relevant points are omitted for space constraints. Readers are encouraged to seek counsel from a construction lawyer for advice on a particular circumstance.