Our law firm represents hundreds of contractors, those that have supplied either goods or services in the the construction of real estate. This video explains what you need you need to know about collecting money owed to you using Payment Bonds.
On private jobs where payment has not been made a Mechanics and Materialman’s Lien is the recommended course of action. However on public property however mechanics and materialmen’s liens may not be asserted. Instead the contractor may pursue payment bond claims.
These are required on all the projects that exceed a certain dollar amount and payment bonds are a collections remedy that involvs four entities.
The claimant which is the party that as supply the goods or services and has not been paid. The principle which is the general contractor that is managing the project. The owner of the property is the owner of the property that is in focus. The surety which is the insurance company that guarantees performance of the general contractor on the job in exchange for premium payments.
The principal and the surety are both liable to the unpaid contractor under the bond. This is also known as joint and several liability.
A bond claim on public projects are governed by The Miller Act which is found in 40 USC Section 3131. Now in Georgia public projects involving state owned property are governed by two Little Miller Acts. State projects are governed by the State Miller Act which is found in OCGA 131060. County and municipal public projects are governed by the county/municipality Little Miller Act which is found in the OCGA 369190. The requirements of these two acts are identical in nature and are commonly referred to just as The Little Miller Acts.
Like mechanics liens, payment bonds are strictly construed any must adhere to the terms of the payment bond. This includes proceeding in the perfection of the bond claim suit within one year of the completion of the project. It’s important to obtain a copy of the payment bond to review the terms set forth therein.
Having handled hundreds of payment bond claims our office can assist in locating a copy of the bond as well as the perfection of the bond claim. The actual terms of the payment bond are largely irrelevant to the determination of any payment bond coverage. The applicable payment bond statutes that of been enacted in Georgia will overrule the provisions that are contained in the bond itself.