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🔐 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 TypeNotice Required?Deadline
Direct to GCNoN/A
Sub-sub or supplier to subYes90 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:

StateNotice DeadlineTo Whom
California20 days (preliminary) + 90 days (stop notice)GC and Owner
Texas15 days (sub-tier)GC
Florida45 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:

JurisdictionDeadline
Federal (Miller Act)1 year from last work
California6 months from completion
Texas1 year from last work
Florida1 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:

  1. Notify the GC (principal)
  2. Review your documentation
  3. Investigate the claim
  4. Request response from GC

Possible Outcomes​

OutcomeWhat It Means
PaymentSurety pays your claim
Partial paymentDispute over amount
DenialSurety rejects claim
No responseMay 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​

  1. Document everything from day one
  2. Send notices early — don't wait until deadline
  3. Keep copies of all correspondence
  4. Don't rely solely on the bond — maintain lien rights too
  5. Act quickly — deadlines are strict
  6. Consult an attorney for significant amounts

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