Two weeks ago, as part of this State Bond Claim Blog Series, I published: “Tip: Send Your Bond Claim To Surety To Ensure Maximum Protection.” I got a surprising amount of feedback to this post because many of our clients and readers had previously confronted the situation discussed: When a prime contractor hadn’t delivered the bond claim to its surety.
That post is related to the subject here, but is actually completely different. In the above-mentioned post, I’m encouraging bond claimants to deliver the bond claim to a party who isn’t necessarily required to receive it. In this post, I explore who must receive the bond claim.
This is a big difference. If you mess up and fail to send the bond to a voluntary party, you still maintain bond claim rights. If you don’t send your bond claim to a required recipient, however, you’re bond claim rights may be destroyed. Here are the three most popular recipients of bond claims.
The Prime Contractor
On public works projects, the prime contractor is usually the party who obtained the payment bond protecting your rights to get paid. It is therefore pretty consistently required from state-to-state that any bond claim notices be delivered to the prime contractor.
In fact, some states require the claimant to deliver its claim to the prime contractor only. In those instances, the prime contractor has an obligation to notify the surety that a claim has been made. My article about sending bond claims to the surety directly addresses the situation when prime contractors do not fulfill this obligation and hide claims from the surety.
The Public Entity Commissioning Work
States also frequently require bond claims be sent to the public entity commissioning the work. When a state requires such notification, bond claimants must be very careful about sending this copy of the bond claim. While I refer to this party quite broadly in the post, state statutes can get very, very specific about who within a public entity must actually receive the notice.
Take the state of California as an example. In California, claimants on a state or county construction project can file their bond claim through a “Stop Notice” filing. California statutes require delivery of the Stop Notice with a particular party or department within the public entity commissioning the work, described as “the office of the controller, auditor, or other public disbursing officer whose duty it is to make payments under the provisions of the contract, or with the commissioners, managers, trustees, officers, board of supervisors, board of trustees, common council, or other body by whom the contract was awarded.”
Pretty specific instructions. California is just an example, as well. There are a number of states with specific directions as to who must receive these claims. If the public entity must get a copy of your bond claim, be careful about sending it to the right party.
While I wrote previously that the surety should get a copy to ensure your maximum protection under a bond claim, in many states the surety must receive a copy. If you’re making a claim in one of these states, you want to make sure you know who the surety is, and you know the identity of the surety long enough before the bond claim deadline that you don’t lose your claim rights waiting to get this party identifies. This is why I also recently published the post: Good Practice: Get A Copy Of The Payment Bond On State Projects.
How To Send Your Bond Claim
In most states, you can “file” your bond claim by filing it with one of the above-three parties (or any combination of them) through postal delivery. Typically, the bond claim must be delivered by pre-paid certified mail with return receipt requested, addressed to the required recipient.
Usually, bond claims on state, county or municipal projects are not recorded with the county recorder. However, there are exceptions to this rule, and I refer you to the recent post: Are Bond Claims Actually Filed With The Recorder or Clerk Of Court?