This February, we focused a lot of attention on state bond claims, authoring a series of blog posts that discussed state bond claim issues that ranged from basic to technical. Through the years of consulting with companies about lien rights, I’ve learned that a lot of folks are confused about bond claims. This is especially the case in our current economy, when many are working on state jobs for the first time because of the slowdown in the private market.

The posts in our “State Bond Claim Series” addresses a spectrum of issues related to payment bond claims, from the most basic of queries to some rather technical legal nuances. These posts give the reader a big picture overview of how state bond claims or claims against payment bonds work, and also issue some warnings for problems that can arise when working in one of these claims.

Here is a summary of the posts from this series:

When Is A Project Considered A State Project?
The State Bond Claim Series starts off with an essential question: when are you on a state project (versus a private or federal project)?  If you aren’t sure about being on a state or county project, you’ll be clueless about which type of lien remedy is available. This post breaks down the differences between federal, private and state works.

How Lien and Bond Claims Against State Projects Work
Now that you know what constitutes a state or county public work, you may not fully understand how to make your claim for payment, and what happens after you make this claim.  This post fills in the gap, offering the reader a big picture overview of the payment bond claim process.

What Is A Payment Bond?
It is sometimes useful to get down to the basics when discussing a topic. Insofar as state bond claims are concerned, it’s really important for the supplier or subcontractor to have a grasp on what exactly a payment bond is. This post defines the payment bond and explains how payment bonds work.

Tip: Send Your Bond Claim To The Surety To Ensure Maximum Attention
Moving away from the big picture or definitional type posts, this post addresses a simple way to make your bond claims move faster and be more effective: by sending it to the surety.  In many states, you’re not required to do this, but that doesn’t mean you can’t…and shouldn’t. To the contrary, you should so send your bond claim, and this post explains why.

Are Bond Claims Actually Filed With The Recorder or County Clerk?
A myth about state bond claims is that they are a “lien,” and even further, that they are “filed” or “recorded” just as a mechanics lien is recorded against a private work.  In most states, as this post exposes, this is not the case. The term “filed” is still used in many state statutes, but it has an entirely different meaning. Understanding this is crucial to making a successful bond claim, and understanding the payment bond claim process.

Knowing A Project’s Final Settlement Date Is Key For State Bond Claim Deadlines
How do you know when to file a state bond claim?  In many states the answer is simple, as the bond claim is due a certain number of days after last furnishing to the project. But a substantial number of states calculate the deadline differently, from the end of the entire construction project. How do you know when this is?  This post explores the options available to you.

What If State Law Conflicts With Provisions Of A Construction Bond?
Filing a claim against a bond on a state construction project is governed by statute in every state, but each of the underlying bonds have associated contractual terms. What if the terms of the payment bond conflict with the statutory requirements?  This happens, and happens frequently, and each state handles the discrepancies differently.

Good Practice: Get A Copy of The Payment Bond On State Projects
Too often, subcontractors and suppliers who aren’t paid on a construction project are ready to make a bond claim, but have no idea which surety holds the payment bond. While it may not be needed information, it is certainly great information to have, and can increase the speed and success of your claim. Everyone furnishing materials or labor to a state project is entitled to a copy of the payment bond, and this post explains why and how to get it.

Why Bond Claims Can Be Better Than Mechanic Lien Claims
Many think they can file a lien claim against a state project, and become disappointed to learn they can only file a bond claim. However, this is no reason to be disappointed. In many ways, the bond claim is a better remedy than the lien claim, and this post discusses why.

Why You Can’t File A Mechanics Lien On A State Project
Now that we’ve talked all about the payment bond claim, distinguished it from a mechanics lien claim, and explained that mechanics lien claims are not allowed on state projects, it’s time to reveal why lien claims aren’t an option on state public works.  And this post discusses the reason behind this principle.

Preliminary Notice Required on State Construction Projects, Too
While there are a lot of differences between state public works and private works, preliminary notice is not usually one of them. Each state has different notice obligations, and obligations may be different in a single state for state and private projects, but state projects are not excused from preliminary notice as a matter of rule (unlike on federal projects, where there isn’t a notice requirement).  This post explores.

Are Bond Claim Regulations The Same In Every State?
Since payment bond claims on state projects are considered a sort-of “government” claim, and since all payment bond claims are the same on federal projects, many presume that the rules related to state bond claims are identical state-to-state.  In many cases, states have adopted the Miller Act and formed a “Little Miller Act,” which means the rules can be quite similar. But, each state is different, and sometimes drastically so.

A Guide To Virginia Payment Bond Claims
Chris Hill from the Construction Law Musings Blog visits our blog to contribute this great guest post. Rather than focus simply on payment bond claims in general, Chris discusses how payment bond claims work in the State of Virginia.  This not only gives Virginia readers a great how-to guide on filing bond claims against state works, but it also demonstrates how each state can have preferences and differences in administrating these claims.

Who Do I Send My Bond Claim To, and How?
This post gets down to the brass tax. Who receives the bond claim, and how do you get it to them?  Unlike some of the other posts that address the concept of payment bonds, this discusses some practicalities.

A Guide To Louisiana Payment Bond Claims
A guest post from Wolfe Law Group’s Seth Smiley addresses payment bond claims in Louisiana, where allegiance to the Napoleonic Code makes the claims process a bit different from the rest of the country.

A Guide to California Payment Bond Claims and Stop Notices
California’s claim process on state and public construction projects is unique to the rest of the country, as it offers unpaid suppliers and contractors two independent types of claims.  One is against the payment bond, and the other is against construction funds. Using both of these remedies is best, as this post explains how they are different and can work together.

FAQ: The Difference Between Payment and Performance Bonds
Closing out the State Bond Claim Series, this post mentions something that has gone unmentioned throughout the month. Every state public work usually has two bonds posted to the project, a payment and a performance bond.  These two bonds are completely different and can sometimes be confused, but this post clears the confusion to help contractors and suppliers understand which bonds do what, and which to turn to for payment.

Written by Scott Wolfe Jr See original article at Roundup of State Bond Claim Series Blog Posts Originally posted on the LIEN

Short Answer: Performance bonds are issued to the benefit of the owner and guarantee the prime contractor will finish performance of the contract, and payment bonds are issued to the benefit of subs and suppliers, guaranteeing they will be paid for materials and labor they furnish.

Long Answer:  Whenever bonds are required on a construction project, there are typically two different bonds contemplated: a performance bond and a payment bond. Although the two bonds serve distinct purposes, they are frequently confused with one another, and most people don’t know the differences between them.

In the mechanics lien and bond claim world, reference is usually made to payment bonds, and claims are made against payment bonds much more frequently than performance bonds.  This is because anyone who furnishes materials or labor to a bonded construction project may file a claim against the payment bond.

The payment bond is issued by a contractor and benefits all subcontractors and suppliers below that contractor. In the event someone furnishes materials or labor to a bonded project and are unpaid, that someone can make a claim for payment against the payment bond.

A performance bond is different in that subcontractors and suppliers really don’t have any rights under it. Instead, the performance bond is issued to the benefit of the property owner, who can make a claim against the bond if the contractor fails to perform.  This performance bond, in other words, guarantees that the contractor will perform in accordance with its contractual obligations.

Written by Scott Wolfe Jr See original article at FAQ: The Difference Between Payment and Performance Bonds Originally posted on the LIEN

The Construction Lien Blog welcomes Seth Smiley, who contributes this guest post about payment bond claims in Louisiana. Seth is a partner at Wolfe Law Group, and a contributor to that firm’s Construction Law Monitor blog. He frequently writes and litigates about construction law issues ranging from payment bond claims, workmanship disputes, construction delay matters and green building challenges. Seth is a licensed attorney in Louisiana and California.

State and county construction in California has gone through the wringer over the past few years. California’s highly publicized budget problems really hit the construction industry.  This lead to a decrease in public works and – I think – an increase in public works claims.

The good news is that these problems are smoothing over and life in state construction is returning to normal in California. However, as anyone in the construction industry knows, this is not going to eliminate state bond claims on these state and county projects. If anything, the increase of state and county projects is only going to increase the volume of claims.

Unlike many other states (but similar to states like Louisiana), California has not adopted a version of the US Miller Act to govern payment bond claims in its state. It has a unique statutory framework that gives contractors bond claim rights and stop notice rights.

The Payment Bond Claim Remedy

On all construction projects valued at more than $25,000, California Civil Code § 3247 requires a payment bond be posted. Any subcontractors or suppliers who are unpaid for work or materials furnished to a state or county construction project can bring a claim against the payment bond.

A claimant is not required to file a “Stop Notice” – explained below – before filing a bond claim. The two remedies are completely separate, and unpaid subcontractors or suppliers can file both a stop notice and a bond claim, or either of them alone.

While each can be filed independently of one another, it is absolutely essential to both claims that a 20-day Preliminary Notice be delivered to qualify to send either.

Bond claims must be filed directly with the prime contractor and the surety, and must be sent to them at anytime after the claimant has furnished its services or materials, but no later than 6 months after the Stop Notice deadline.  Stop Notices, and its deadline, are discussed below.

The Stop Notice Remedy

There is a great article on this ConstructionLienBlog that focuses on the Stop Notice remedy, and I highly recommend it: The Differences Between A Stop Notice And A Mechanics Lien.

California is one of the few states that statutorily provides for a Stop Notice filing. A subcontractor or supplier who is unpaid for services or materials sends off a Stop Notice to the public entity commissioning the work and the prime contractor, and upon receipt, the public entity is required to discontinue payments to the prime contractor in an amount sufficient to satisfy the claimant’s claim.

To file a Stop Notice on a California state project, a subcontractor or supplier must have delivered the required 20-day Preliminary Notice within 20 days of first furnishing labor or materials to the project.  Thereafter, it must use the proper Stop Notice form, and send it certified mail with return receipt requested to the public entity commissioning the work and to the prime contractor.

Stop Notices must be filed within the earlier of: (a) 30 days from the recording of a “Notice of Completion” for the project; or (b) If this notice is not recorded, within 90 days from the actual completion. Must file suit against the surety if claim remains unpaid, and suit must be brought no later than 6 months from the expiration of the Stop Notice period.

Written by Seth Smiley See original article at A Guide To California Payment Bond Claims and Stop Notices Originally posted on the LIEN

The Construction Lien Blog welcomes Seth Smiley, who contributes this guest post about payment bond claims in Louisiana. Seth is a partner at Wolfe Law Group, and a contributor to that firm’s Construction Law Monitor blog. He frequently writes and litigates about construction law issues ranging from payment bond claims, workmanship disputes, construction delay matters and green building challenges. Seth is a licensed attorney in Louisiana and California.

Louisiana loves to be different. We have Mardi Gras, cajun food, Swamp People…and in the legal context, we’ve bucked the national trend and pledged allegiance to the Napoleonic Code. It should then be obvious that when legislating payment bond claims for state public works Louisiana wouldn’t just adopt the terms of the US Miller Act like so many other states.  Oh no, Louisiana had to create is own special Public Works Act, and here is how it works.

Step 1: Is A Payment Bond Required?

The first thing to consider is whether a payment bond even exists on the state or parish construction project. If there’s no bond, there’s no ability to make a bond claim. In most circumstances in Louisiana, however, there is (or should be) a payment bond.

La RS § 38:2241(2) is the authority on this point.  It requires a bond be placed for any “contract in excess of twenty-five thousand dollars per project.”  The statute also requires the bond be recorded (along with the contract) in the recorder of mortgage’s office. This is a great provision for bond claimants, as they can get a copy of the prime contrat and bond in this manner. Unfortunately, it’s not always recorded.

Step 2: Send Notice!

Louisiana is typically a non-notice state on state or private works. However, they are referred to as  a non-notice state only because they do not have the traditional preliminary notice requirements, which I consider the notice furnished by subcontractors or suppliers within a certain number of days from first furnishing materials.

Louisiana does have nuance notice requirements, essentially picking on two industries: material suppliers and equipment lessors.

The most burdensome notice requirement in Louisiana falls upon equipment lessors or equipment rental companies. On public works, equipment lessors must furnish a “Notice of Lease” to the public entity commissioning the work and to the prime contractor within 10 days of first furnishing the equipment. See La R.S. § 48:256.6(C)(1).

The other notice requirement falls upon material suppliers, who must furnish a “Notice of Non-Payment” within seventy-five days of the last day of the month when last furnishing materials to the project.  See La R.S. 38:2242(F).

Step 3: Deliver and Record Your Claim

Once unpaid on the project, the next step is to deliver and record your claim. Yes, that’s right, deliver and record.  Scott previously posted on the ConstructionLienBlog’s State Bond Claim Series that payment bond claims rarely need to be recorded.  This is true.  But it’s not true in Louisiana.

In Louisiana, payment bond claims must be recorded with the parish recorder of mortgages office, exactly like a traditional mechanics lien claim. It must also be sworn to and notarized, which is actually unlike the private works lien claim that no longer requires notarization.

These claims must be filed within 45 days of “final acceptance” of the work by the department letting the contract.

Written by Seth Smiley See original article at A Guide To Louisiana Payment Bond Claims Originally posted on the LIEN

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.

The Surety

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?

Written by Scott Wolfe Jr See original article at Who Do I Send My Bond Claim To, and How? Originally posted on the LIEN

Thanks to guest blogger Christoper G. Hill for his contribution to our State Bond Claims Blog Series, addressing the topic as it relates to Virginia’s Little Miller Act. Christopher G. Hill is lawyer and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC, a LEED AP, and member of Virginia’s Legal Elite in Construction Law. He specializes in mechanic’s liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals.  Mr. Hill authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals.

First off, thanks to Scott for the opportunity to discuss payment bond claims in Virginia.

At my Construction Law Musings blog, I have discussed the topic of mechanic’s liens extensively.  However, a mechanic’s lien may not be appropriate depending on the type of project that you work on.  For instance, in Virginia (as in most states), a contractor cannot place a mechanic’s lien on a public project.

In Virginia, the legislature has adopted the “Little Miller Act,” modeled after its federal counterpart.  The Virginia Act requires that a contractor post both a payment and procurement bond on any public project valued at over $500,000.00 (this change in value of contract was implemented in 2011).  These bonds secure just what you would think that they would,  i. e. payment of subcontractors and second tier subcontractors and performance of the work. The payment bond is a substitute for the lien rights that a subcontractor would have on a private project.

Essentially, the Little Miller Act allows a subcontractor or material supplier the right to collect under the bond if it has not been paid within 90 days of the date that the last material or labor was provided to a project. Once the subcontractor or material man shows that the labor or material was in fact provided, the claim is collectible absent some proof by the bonding company or contractor that it has some sort of payment defense (setoff, delay, etc.).

In order to take advantage of this powerful tool, and if you are a first tier subcontractor, you need only file a claim within a year of the last date of work/material supply if you are in direct contract with the general contractor and 90 days after your last work for which you claim payment was performed.

If you are a second tier subcontractor, you must send a notice to the general contractor within 90 days of the last date of work (another July 2011 change). As a practical matter, all subcontractors should also copy the surety on the notice in order to begin the pressure on the general contractor to get payments flowing.

Unfortunately, if you are more than two degrees of separation from the general contractor the Little Miller Act’s protection does not apply to you and you may be stuck with a contract claim against a subcontractor.

This brief overview should give the basics of Virginia’s Little Miller Act.  As always, consult with a knowledgeable attorney when making any sort of construction claim.

Written by Christopher Hill See original article at A Guide To Virginia Payment Bond Claims Originally posted on the LIEN

If you’re a reader of this blog, you can probably guess the answer to this question. If there is a single theme in the mechanics lien and bond claim world, it’s that there are so few rules that carry over and apply in every state. The same is true for state bond claim requirements.

A lot of controllers or credit managers do wonder this question, however, which is why I address it here on the blog. The confusion stems from the US Miller Act, which does apply nationwide.

If you’re furnishing materials or labor to a federal construction project, the rules to make a bond claim are the same state-to-state. All claims are processed under the US Miller Act. A lot of companies make the mistake that all public projects are governed by this act, especially if the company performs a lot of federal work. It’s necessary to segregate between public projects commissioned by the federal government, and those commissioned by state or county governments.

There’s another layer of confusion here, however. The rules governing state and county bond claims are commonly referred to as the “Little Miller Act,” and adopt a large number of provisions and theories from the federal version. In fact, there’s a handful of states that copy the federal statute verbatim.

As a result of the similarity in the statute’s names, and that some states have identical requirements, there’s a nasty rumor in the construction industry that bond claim notice and claim provisions are the same state-to-state. This is a dangerous belief, as the majority of rules contrast each other between states. If you want to learn about the bond claim notice and claim requirements in your state, visit Zlien’s helpful Resources Page, which allows you to select a state and view a chart of all bond claim requirements.

Written by Scott Wolfe Jr See original article at Are Bond Claim Regulations The Same In Every State? Originally posted on the LIEN

Preliminary notice is frequently required on private projects, and never required on federal projects.  So, is preliminary notice required on state and county projects?  The answer here depends on your state, but odds are that public preliminary notice requirements closely mirror the private notice requirements for that state.

Why Many Believe Preliminary Notice Is Not Required On Public Works

There’s a big misconception out there that a preliminary notice is not required on a state or county project. For review, a preliminary notice is a notice state statutes require suppliers and subcontractors send to the property owner and/or the prime contractor at the start of furnishing to a project.

However, since the preliminary notice is a creature of traditional mechanics lien statutes, and the traditional mechanics lien is not available to unpaid parties on a construction project, folks frequently think that preliminary notice is not required on public works. The misconception is stregthened by the federal Miller Act, which applies to all federal projects, since preliminary notice is never required on those projects.

State and county projects are not governed by the federal Miller Act, however, but rather the “Little Miller Act,” which is a version of the federal statute. A number of states copy the federal Miller Act statute verbatium and thus do not require preliminary notice, but there are a healthy number of states who do not. Then, there are a healthy number of states who do require preliminary notices.

Does My State Require Preliminary Notice for Public Works?

Just like everything in the mechanics lien law universe, there are few hard and fast rules to help companies sort out preliminary notice requirements. I frequently tell folks that if preliminary notice is required on a private project, the state likely has a mirror notice requirement for its public works.

For example, in California, the 20-day preliminary notice required on private projects is also required on state projects, and the requirements are virtually identical. The same is true in Louisiana, where equipment rental companies and material suppliers have identical preliminary notice requirements on private and state projects.

There are exceptions, and so it’s a good idea to reference the laws of each state.  Zlien publishes a great mechanics lien law resource on its website. You can select the state you’re interested in and view a chart of the preliminary notice and mechanics lien requirements on private or state projects.

Written by Scott Wolfe Jr See original article at Preliminary Notice Is Required On State Construction Projects, Too Originally posted on the LIEN

In this State Bond Claim Series, we’ve talked about the lien-like remedy available to contractors and suppliers on federal, state or county projects. While many folks believe they can file a mechanics lien on a state or county project, they are incorrect.  The traditional mechanics lien remedy – where you file a privilege against an actual piece of property – is not available on state and county projects. Instead, as we’ve been exploring in the blog series, those unpaid for work or materials furnished to a state or county construction project may file a bond claim.

These are commonly referred to in the industry as “liens” or “mechanics liens,” but they are actually not lien filings. Instead of a “lien” filing a claim against the property itself, a “claim” is filed against the project’s payment bond.

Since the mechanics lien term is used so heavily in the construction industry (thus leading people to assume they can file a mechanics lien on a state or county project), one must wonder: why can’t you file a mechanics lien on a state project?

The answer is quite simple, and it’s that the state, local and federal governments are not going to risk losing its title to property. There are no scenarios in the law that allows a private company or private person to acquire an encumbrance against state property.  Plus, if we go back to the original purpose behind the mechanics lien instrument, it was to provide protection to builders and suppliers who were furnishing to private projects because the private credit markets were so poor in the 1800s.  There was never any significant problems with the US or state governments not having the funds to complete capital improvements.  Over time, to protect builders and suppliers from contractors who misapply construction funds, the governments created bond claim laws to act a lot like mechanics lien laws.

Written by Scott Wolfe Jr See original article at Why You Can’t File A Mechanics Lien On A State or County Project Originally posted on the LIEN

It’s surprising how often I encounter disappointment when I explain that a traditional mechanic’s lien cannot be filed against a state, county or federal project. The terms “mechanic’s lien” and “lien” get thrown around so much in the construction industry, that they’ve acquired a mystic existence.  If there aren’t “lien rights,” disappointment ensues.

As I’ve explained in the past, there are never traditional mechanic lien rights on state, county or federal projects. And sometimes (such as in the state of Florida), lien rights on private projects are eliminated by the posting of a payment bond. However, while payment bonds eliminate traditional mechanic lien rights, that’s not a reason to get upset. In many ways, payment bond claims are preferable to a traditional mechanics lien claim.

Surety Bonds Are Rarely “Over-Mortgaged”

If you aren’t paid on a private construction project and file a mechanic’s lien, things can go fantastically, and most frequently do go fantastically.  The mechanics lien is an awesome remedy and usually results in getting contractors and suppliers paid. However, there are some circumstances when a contractor, property owner and/or project goes completely belly up, which leaves mechanic lien claimants to fight amongst themselves (and with mortgages and construction lenders) over how the value of the property will be split between them.

If a property has $100,000 of equity and $500,000 of claims…well, you can do the math.

This problem very, very, very rarely happens with surety and payment bonds. In most cases, payment bonds must be posted in an amount equal to the contract amount.  Thus, there is very rarely a situation when the amounts due to contractors and suppliers exceed the value of the bond.  As a result, the bond claim is actually more secure, because it’s virtually guaranteed that the money will be there.  No selling of hte property and competing with other lien claims required – just make the claim, and that’s that.

The Claims Process Can Be Quite Smooth

There are always exceptions, but filing a bond claim can turn out to be a pretty good experience. The bonding company is going to review your claim and the backup materials and make a determination about the validity of your claim. There are many occassions when the bonding company determines your claim is valid, and pays it.

The result of this is that your claim gets an “independent” decision pretty early.  If the bonding company refuses to make payment and denies the claim, you can still file a lawsuit to enforce your claim and force payment.  As such, the bonding company’s decision is not final.  However, it is a benefit to have the bonding company review your claim and potentially pay it.  This type of experience never happens with a traditional mechanic’s lien claim, however, and so there is never a similar opportunity like this to get paid and avoid litigation.

Written by Scott Wolfe Jr See original article at Why Bond Claims Can Be Better Than Mechanic Lien Claims Originally posted on the LIEN