Payment Bonds issued by sureties are widely used by prime contractors and subcontractors to encourage building suppliers and other subcontractors to provide work and materials on particular construction projects. Although payment bonds may help subcontractors and suppliers receive payment for their services, there are many different kinds of payment bonds each with differing deadlines and requirements. The Cobb Law Group, for example, regularly makes claims against private payment bonds, Georgia public works payment bonds, as well as Federal public project payment bonds on behalf of its clients. Some types of payment bond have statutorily minimum requirements and every payment bond contains its own contractual requirements. Thus, it is vital that your payment bond claim is made by a law firm who understands these differences and can help you navigate the waters of surety and bond law. The Georgia construction lawyers at the Cobb Law Group have made hundreds of successful bond claims.
Whether you need to provide notice to preserve your right to make a payment bond claim or if you need to file a claim or litigate against the surety backing the payment bond, contact us today. We offer a full range of payment bond and surety law services to our clients including the following:
- educational seminars to train staff on payment bond claim requirements
- prepare & file payment bond claims;
- complete payment bond claim forms;
- negotiate with the surety regarding your claim;
- file lawsuits against the surety to enforce bond claim rights;
- arbitration & mediation services; and
- other matters related to surety law, payment bond claims and construction law.
If I Can’t File a Materialmen’s Lien on a Public Project, What Rights do Subcontractors Have? Both federal law and Georgia state laws give contractors, subcontractors and suppliers rights to collect money which they are owed. On private construction projects, if an entity or person working on the job site does not receive payment for their labor or materials, then they may have a right to file a Mechanics and Materialmen’s Lien against the real estate. The legal theory justifying this right rests upon the presumption that the lien claimant’s work or materials were used to “improve” the the value of the real estate; thus, not only does the entity or person with whom the lien claimant contracted owe the lien claimant the contractual amount owed, the real estate itself might also be responsible for the debt as the real estate benefited from the improvements (in other words, it is possible to foreclose upon a construction lien and force the sale of the real estate in order to recover the money owed). However, it has been held that it is against public policy to allow government-owned real estate from being subject to materialmen liens (as public property is not subject to levy and sale at foreclosure). However, an alternate collection remedy has been offered to those working and supplying on federal, Georgia and municipal projects–payment bonds. Payment bonds (sometimes called “construction bonds” or “surety bonds”) are insurance contracts required on government public works projects, and they “insure” payment to those working and supplying materials on the job site. Payment bond claims are entirely different from materialmen lien claims, but they serve similar purposes by giving contractors the right to seek payment directly from the surety (in addition to the entity or person with whom they contracted). As in lien law, payment bond claims have their own set of requirements and deadlines. Consequently, it is vital that you select a Georgia construction lawyer who has a great deal of experience with both mechanics and materialmen’s liens as well as making and enforcing payment bond claims; our Cobb Law Group attorneys possess decades of experience working with Georgia’s complex lien and bond requirements.
How Can Payment Bonds Help You Collect? As mentioned above, the person or entity who hired you or purchased materials from you owes you the money. In addition, if there is a payment bond covering the project on which you worked or supplied, then you may also be a beneficiary of the payment bond. If all the requirements are met and you timely make a claim against the bond, then the insurance company (surety) backing the bond may also be responsible for paying you. Thus, working on a Georgia project covered by a payment bond can assist your recovery rate substantially.
What is the Deadline to Make a Claim Against a Payment Bond in Georgia? Payment bond claims may be subject to different deadlines; however, it is common to require a claim to be made (in writing) within ninety (90) days of the last day in which the claimant actually worked on the project or last supplied materials to the project. Our construction and payment bond lawyers understand all the deadlines and requirements for enforcing your claim for nonpayment and will be glad to assist you with your claims.
What is a Surety Bond on a Georgia Construction Project? Although the term “surety bond” is more expansive than “payment bond”, many people use the terms synonymously. In addition, payment bonds may also be called “Contract Bonds”, “Miller Act Bonds” or “Construction Bonds”.
What is the Federal Miller Act? The United States federal government has its own laws and statutes regarding payment bonds covering federal public works projects–whom the bond covers, minimum bond amounts, how to make a claim against a bond and how to perfect a subcontractor or supplier’s rights under a payment bond. These federal rules are commonly referred to as the Miller Act. The Miller Act Statutes are codified at 40 U.S.C.A. Sections 3131–3134 (formerly 40 U.S.C. §§ 270a–270d); to view a free copy of U.S.C. §§ 3131 et seq., please click here.
What is the Little Miller Act? The State of Georgia has its own laws and statutes governing payment bonds which cover state public works projects and municipal (e.g., city and county) public works projects, and these statutes address such issues as who is protected by the payment bond, minimum bond requirements, how claims are made against a payment bond as well as the rights of subcontractors and suppliers under payment bonds. Because these state guidelines are similar to the federal Miller Act requirements, the payment bond statutes in Georgia are commonly referred to as the “Little Miller Act” or “Georgia Miller Act”; it is important to note that although the Miller Act and Little Miller Act share many commonalities, they have some distinct and important differences which can mean the difference between receiving payment and not receiving payment; consequently, you can rely upon our construction lawyers to help you steer through the differences and enforce your rights. In fact, this is even more important in Georgia where there are two separate statutes covering state and municipal public works projects. Georgia’s Little Miller Act covering State of Georgia public works projects is codified at O.C.G.A. Section 13-10-1 et seq, and the statutes covering Georgia municipalities’ public works projects is codified at O.C.G.A. Section 36-91-90 et seq. To view a free copy of O.C.G.A. §§ 13-10-1, please click here; to view a free copy of O.C.G.A. §§ 36-91-90, please click here.
Who is the Principal on the Payment Bond? The principal on a payment bond is the entity or person who purchases the bond (typically, this is the general contractor). The principal pledges to make timely payments to its subcontractors and suppliers.
Who is the Obligee on the Payment Bond? The obligee of the payment bond is the entity which requires the principal to purchase the bond; on public works, the obligee will be the governmental 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.
Who is the Surety on the Payment Bond? The surety is the underwriter (i.e., insurance company) that guarantees that if the principal fails to properly pay its subcontractors and suppliers, they will make the authorized payments.
Who is the Claimant under the Payment Bond? The bond claimant is the entity (usually a subcontractor or supplier) who performed work or provided labor or materials on a project but did not receive payment.
Can a Private Construction Project in Georgia Include a Payment Bond? Yes, many large privately owned construction projects in Georgia are also covered by payment bonds.
How do Payment Bonds Differ on Public Projects and Private Projects in Georgia? Private project payment bonds are not governed by either the Miller Act or the Little Miller Act; instead, they are governed by Georgia contract law. Private project payment bonds add a layer of protection to subcontractors and suppliers working on projects in Georgia, and, it is important to note the rights afforded a subcontractor or supplier are in addition to any rights they may have to file a mechanics or materialmen’s lien. Our lien and bond attorneys have a great deal of experience simultaneously pursuing our client’s lien rights and their payment bond rights.
Can Payment Bond Rights be Waived? Yes. Georgia recognizes two specific documents which waive bond claim rights: “Interim Waiver and Release Upon Payment” and a “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 sixty (60) days from the date that the waiver was signed or ninety (90) days from the date last worked, whichever period of time is shorter.
What Does it Mean to “Bond Off a Lien”? This phrase has nothing to do with payment bonds on construction projects in Georgia; instead, it is a right granted to the owner of (or contractors working on) real estate against which a construction lien has been placed. The owner may “bond off” or remove the lien by posting either cash or a surety bond; the cash or the surety bond stands in the place of the lien by providing a subcontractor or supplier a source of recovery if they prevail in their lien claim.
Contact Us Today: As you can see, there are many different types of payment bonds, and they each have their own regulations and requirements. In addition, bond rights may be one of several alternatives which help subcontractors and suppliers get paid for their work and their materials. You can rely upon the vast experience and knowledge of the payment bond attorneys and materialmen attorneys at the Cobb Law Group–and we are able to represent clients in every Georgia county. If you have any questions regarding claiming against or enforcing your rights under a surety bond or payment bond, please email us or call us toll free at 1-866-960-9539 today!