In Georgia, certain public projects require the general contractor to obtain a payment bond to benefit those who provide labor, services, materials, and equipment to the project. This includes subcontractors, materialmen, and other contributors who risk significant financial loss should payment issues arise.

At the Cobb Law Group, we have decades of experience representing clients involved in payment bond matters. We have successfully pursued bond claims in state and federal courts and diligently protect client interests from the moment the claim is made until the case concludes. To speak with a Georgia payment bond claim lawyer, call 770-886-5890.

Construction Payment Bonds in Georgia

In Georgia, there are four types of payment bonds (also known as surety bonds and real estate bonds) covering construction industry projects, each with its own rules and requirements. The type of bond needed for a particular project depends on who the contracting entity may be.

  • Federal Public Works Project Bonds Under the Miller Act: The federal Miller Act requires payment bonds for most United States government projects to protect subcontractors and suppliers. The public project must have a value of $100,000 or more. There is no preliminary notice requirement for a federal project.
  • Public Works Project Bonds Under the Georgia Little Miller Act: State-owned construction projects require the general contractor to post a payment bond to cover the‌ ‌materialmen‌ ‌and‌ ‌subcontractors. Like federal public works bonds, the project must be worth at least $100,000. State law further specifies that payment bonds must equal 100% of the contract price. 
  • Georgia Municipality Public Works Project Bonds: Local government projects like schools must maintain a payment bond for the benefit of potential bond claimants like subcontractors and material suppliers.
  • Private Project Payment Bonds: Although not required by statute, private projects may have surety bonds in place, with the terms being defined in the construction contract. 

When a subcontractor or supplier does not receive payment for their contributions to a public or covered private construction project, they may recover the monies owed by filing a claim against the prime contractor payment bond. The Cobb Law Group assists clients by:

  • Providing timely and relevant legal advice
  • Clarifying the payment bond statutes that govern their claim
  • Preparing and filing payment bond claims / real estate bond claims
  • Ensuring compliance with all statutory notices
  • Presenting the necessary documentation to the surety, using statutory forms when required 
  • Negotiating the claim either informally or formally through mediation or arbitration
  • Filing a lawsuit when necessary to protect their right to payment

As a firm focusing only on construction law, our attorneys understand the laws that govern payment bond claim enforcement under the Miller Act and federal Georgia Little Miller Act. We have represented thousands of clients in actions arising from surety bond claims and have the experience needed to pursue best results in and out of the courtroom.

Parties in a Construction Payment Bond

Payment bond terms refer to the following parties: the principal, the obligee, the obligor, the surety, and the bond claimant. 

  • Principal: The‌ ‌principal is the person or entity who purchases the bond. ‌This is typically‌ ‌the general‌ ‌contractor.  The principal pledges to make timely payments to its subcontractors and suppliers.
  • Obligee: The obligee of the payment bond is the entity that requires the principal to purchase the bond. On a public works project, the obligee will be the public entity or agency for whom the project is being constructed. On a private project payment bond, the obligee will most likely be the project owner or developer.
  • Surety: A surety is the underwriter (i.e., insurance company) that pays subcontractors and suppliers if the principal fails to do so.
  • Bond Claimant: The bond claimant (usually a subcontractor or supplier) is the party that performed work or provided labor or materials on a project but did not receive payment.

Can Payment Bond Rights Be Waived?

Georgia recognizes two specific documents which waive bond claim rights: 

  • Interim Waiver and Release Upon Payment
  • Final Waiver and Release Upon Payment 

If a bond claimant signs either of these documents, then it may shorten the deadline for making a timely bond claim to 60 days from the date that the waiver was signed or 90 days from the date last worked, whichever period of time is shorter.

Payment Bond vs Lien Claim

Both federal and Georgia state law give contractors, subcontractors, and suppliers the right to collect money that they are lawfully owed. On private construction projects, if an entity or person does not receive payment for the furnishing of labor or materials, they may have a right to file a mechanics lien or materialmen’s lien against the real estate.  

These lien rights are justified by the presumption that the claimant’s work or materials improved the value of the property. ‌Therefore, if the subcontractor wasn’t paid, then the real estate that benefited from the improvement may be liable. ‌If their claim is not satisfied, the property may be sold to recover the money owed.

However, public policy does not allow municipal, state, or federal government projects to be foreclosed upon and sold. Payment bonds are an alternative form of payment protection for those working on or supplying to federal, state, and municipal projects. As with lien rights and laws, payment bond / real estate bond claims have their own set of requirements and deadlines.  

Filing a Claim Against a Construction Payment Bond

Under the federal Miller Act, first-tier subcontractors do not have to send preliminary notice to the federal agency or contractor before proceeding with a claim against a contractor’s bond, although a 90-day period must pass since their last day of work. In addition:

  • Second-tier subcontractors (those who subcontract with a first-tier subcontractor or supplier) must provide written notice to the general contractor within 90 days after they last worked or supplied equipment or materials to the project.  
  • A‌ ‌subcontractor‌ ‌has one year from the last day of work to file a lawsuit in federal court.
  • Payment bond protection does not extend beyond suppliers who have furnished materials to first-tier subcontractors (suppliers to suppliers).

Georgia’s Little Miller Act requires an unpaid subcontractor who does not have a direct contract with the prime contractor to send a Notice to Owner and a Notice to Contractor within 30 days of the day they begin working. If they do not receive payment, then they may file a claim on the bond. ‌Claimants must file suit within one year after substantial completion of the work and its acceptance by the government entity.

After surety companies receive actual notice of a claim, they usually ask for more information and supporting documentation. The surety will investigate the claim and determine:

  • Whether the prime contractor failed to make payment when it was due
  • When the claimant was entitled to payment
  • Whether there was a problem with the work or materials 

This investigation can lead to any number of conclusions, including payment, a defense for non-payment, negotiations, mediation, or litigation.

The process for making a construction bond claim on a private project may be different. A Georgia bond claim lawyer at the Cobb Law Group can review the terms of the payment bond to determine a claimant’s rights and the appropriate process for filing a claim.

Get a Consultation From a Georgia Payment Bond Claim Lawyer

Real estate bond claims may seem relatively straightforward, but they require strict adherence to statutory and preliminary notice rules. If a potential claimant fails to comply with every requirement of the claim, it could prevent them from collecting from the surety.At the Cobb Law Group, we recognize the critical importance of an efficient and favorable resolution to a payment bond claim. Every day that a subcontractor or supplier waits for payment can place a major drain on their profit margin. Whether the claim involves a surety bond on a public works contract or a private payment bond, we fight for the results our clients need. To learn more or to schedule a consultation with a Georgia bond claim lawyer, give us a call at  770-886-5890 or fill out our online contact form.