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How Do I Get Paid On A Public Project That Has No Bond?

By Alex Barthet

Ensuring you get paid on a public project can be tricky if there’s no bond.  As a subcontractor, a sub-subcontractor or a supplier, you may consider yourself lucky to have been selected for a public job. Why?  Because in the event you are not paid, you believe you can put your faith in payment bonds, a type of debt security that municipalities use to finance new projects and improvements.  But it doesn’t always work out that way.

You deliver materials. You do your work. You aren’t paid. Then you learn there is no bond. Unfortunately, you learn this too late, as you have already done the work and you are already owed money. Now what?

Before we move forward, let’s take a step back. What do you know about bonds?

What public projects need bonds?

In Florida, for a public job between $1 and $200,000, the municipality or school board responsible does not have to procure a bond. On projects of this scale, it’s highly likely there is no bond, so this work is where the risk lies. When the job is between $200,000 and $400,000, it’s optional for a municipality to have a bond. Any job greater than $400,000 must have a bond.

If you work on federal projects, which are governed by the Miller Act, those over $100,000 must be bonded.

Why is it different for a public versus a private job?

On private projects, you have the right to record a lien on the property. If you don’t get paid, and you have followed the notice requirements that the lien law requires, you have recourse. You can look to the property.

On public jobs you have no lien rights.  So if there is no bond, where does that leave you?  Your recovery will be based on your customer and your contract. If you have concerns about your customer’s ability to pay you on a public job, or concerns about your contract, you should address these issues before you start the job.

What does it mean to think ahead on a public job?

Verify, do not assume, that a job is bonded. Obtain a copy of the bond. Asking the general contractor who has the contract with the agency might be all that is involved. Just call. Keep in mind this may not be your direct customer.

Another way to obtain a copy of the bond is to submit a formal request to the public agency. This

Source: http://feedproxy.google.com/~r/lienzone/~3/5S4m_mGkEOA/

  

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