🔐 Payment Bond Claims Guide
When you're not getting paid on a bonded project, the payment bond is your safety net. Here's how to use it.
What is a Payment Bond?
A payment bond is a guarantee from a surety company that subcontractors, suppliers, and laborers will be paid.
Required on:
- Federal projects over $150,000 (Miller Act)
- Most state/local public projects
- Many private projects (by choice)
Parties involved:
- Principal: The GC who bought the bond
- Obligee: The project owner
- Surety: Insurance company backing the bond
- Claimant: You (sub, supplier, laborer)
When to Make a Bond Claim
Consider a bond claim when:
- GC isn't paying and won't resolve
- GC is disputing valid charges
- GC is heading toward bankruptcy
- You've exhausted other collection efforts
Don't wait too long — there are strict deadlines.
Who Can Make a Claim?
First Tier (Direct Contract with GC)
- Subcontractors
- Material suppliers
- Equipment rental companies
Claim rights: Generally straightforward
Second Tier (Contract with Sub, Not GC)
- Sub-subcontractors
- Suppliers to subs
Claim rights: More complex, notice requirements
Third Tier and Beyond
- Generally no bond rights
- Must pursue the party you contracted with
Notice Requirements
Federal Projects (Miller Act)
| Claimant Type | Notice Required? | Deadline |
|---|---|---|
| Direct to GC | No | N/A |
| Sub-sub or supplier to sub | Yes | 90 days from last work |
Second-tier notice must include:
- Amount claimed
- Name of party you contracted with
- Description of work/materials
State Projects
Each state has different rules. Common requirements:
| State | Notice Deadline | To Whom |
|---|---|---|
| California | 20 days (preliminary) + 90 days (stop notice) | GC and Owner |
| Texas | 15 days (sub-tier) | GC |
| Florida | 45 days (preliminary) | GC and Owner |
Check your specific state law.
Deadline to File Suit
Even after proper notice, you must file suit within the deadline:
| Jurisdiction | Deadline |
|---|---|
| Federal (Miller Act) | 1 year from last work |
| California | 6 months from completion |
| Texas | 1 year from last work |
| Florida | 1 year from last work |
Missing the deadline = losing your claim.
How to Make a Bond Claim
Step 1: Gather Documentation
- Your contract (with GC or sub)
- All invoices/pay applications
- Delivery tickets/receipts
- Proof of work performed (daily reports, photos)
- Change orders (signed or disputed)
- Correspondence about non-payment
- Copy of the payment bond
Step 2: Get the Bond
Request a copy of the payment bond from:
- The GC (they should provide)
- The project owner
- County recorder (public projects often recorded)
Step 3: Send Notice (If Required)
If you're second-tier or state law requires:
- Send by certified mail
- Keep proof of mailing
- Include all required information
- Send within deadline
Step 4: Send Demand to Surety
Write to the surety company:
- Identify the bond and project
- State the amount owed
- Summarize the work/materials
- Attach supporting documentation
- Request payment within 30 days
Step 5: Follow Up
If no response or denied:
- Request written explanation
- Consider mediation
- Consult attorney
- File suit before deadline
Sample Bond Claim Letter
[Your Company Letterhead]
Date: [Date]
VIA CERTIFIED MAIL
[Surety Company Name] [Address]
Re: Payment Bond Claim Bond Number: [Number] Project: [Project Name] Principal: [GC Name] Claim Amount: $[Amount]
Dear Claims Department:
Please accept this letter as a formal claim under the payment bond referenced above.
Claimant Information: [Your Company Name] [Address] [Contact Information]
Contract Information: We contracted with [GC Name] on [date] to provide [scope of work] on the above project. A copy of our contract is enclosed.
Claim Amount: We are owed $[Amount] for work performed and materials furnished, as detailed in the attached invoices.
Work Summary: [Brief description of work performed or materials supplied]
Payment History:
- Total contract value: $[Amount]
- Amount paid to date: $[Amount]
- Amount outstanding: $[Amount]
We have made repeated demands for payment from [GC Name] without success. Copies of demand letters are enclosed.
Please investigate this claim and remit payment within 30 days.
Enclosed:
- Copy of contract
- All invoices
- Proof of work (daily reports, delivery tickets)
- Correspondence with GC
- Copy of payment bond
Sincerely, [Signature] [Name, Title]
What Happens After You File
Surety Investigation
The surety will:
- Notify the GC (principal)
- Review your documentation
- Investigate the claim
- Request response from GC
Possible Outcomes
| Outcome | What It Means |
|---|---|
| Payment | Surety pays your claim |
| Partial payment | Dispute over amount |
| Denial | Surety rejects claim |
| No response | May need to file suit |
If Denied
Common reasons for denial:
- Missed notice deadline
- Missed suit deadline
- Not a covered claimant
- Dispute over work quality
- Contract defense
Next steps: Attorney consultation, consider litigation
Tips for Success
- Document everything from day one
- Send notices early — don't wait until deadline
- Keep copies of all correspondence
- Don't rely solely on the bond — maintain lien rights too
- Act quickly — deadlines are strict
- Consult an attorney for significant amounts