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How do I get paid after sending notification to the surety?

By Alex Barthet

You did the work but didn’t get paid. So you sent your notice of nonpayment and backup documents. Why won’t the bonding company pay? Why is it taking so long?

It’s important to understand that a surety doesn’t work like insurance. When you have a car accident, you submit a claim to your insurance company, and they cut a check. Most sureties, on the other hand, will not pay you voluntarily unless the principal, the bonded contractor, agrees to pay you first.

Hold up. If the contractor agreed to pay you, you wouldn’t have submitted a claim in the first place, right? There lies the tension, between the surety and the principal. This is the reason you haven’t been cut a check. Delays are highly likely. But there are steps to follow and signs to watch for to put yourself in the best position possible to get paid.

First, be aware of bond claim rules and deadlines, and have a system in place to send timely notices.

For private bonded projects

If you have a direct contract with the bonded prime contractor (you are a sub on the job):

  • You do not need to send a first notice to the owner/contractor. However, you should. We recommend having in place a system that automatically processes notices to owners/contractors on every job over a certain amount of money.
  • You need to send notice of nonpayment to the surety or contractor within 90 days of your last day of work or last delivery of materials. This is a hard count – every weekday, weekend day and holidays, too. If the 90th day is a weekend or holiday, it will roll to the next business day. Take note, the surety and the contractor must receive notice by the 90th That doesn’t mean you can wait until the 90th day to mail it.
  • You need to file any suit on the payment bond within one year from your last work on the job or the last delivery of materials.

If you do not have a direct contract with the bonded prime contractor (you are a sub-sub or a material supplier to a sub):

  • You need to send first a notice to the owner/contractor within 45 days of your first work on the job or delivery of materials. This must be received by the 45th day, and every weekday, weekend day and holiday counts. If the 45th day falls on weekend or legal holiday,

    Source: http://feedproxy.google.com/~r/lienzone/~3/FwuEy_m-UA0/

      

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