Payment Bonds on Construction Projects
When a payment bond is on a project, subcontractors and materialmen have no claim against the owner and no right to file a lien against the property. The property is off the table. Your only remedy is a claim against the bond itself, and the bond claim has its own rules, notices, and deadlines that are completely separate from the lien rules.
Many of our clients come to us after spending weeks trying to figure out how to file a lien, only to discover that a bond was posted on the project before work ever started. At that point the only question is whether they still have time to make a proper bond claim. So the first thing you need to know when you are not being paid is whether there is a bond on the project.
When Is a Payment Bond Required?
On public projects, meaning jobs for the state, a city, a county, a school district, or any other government entity, a payment bond is almost always required by law. This applies to virtually all public construction contracts of any significant size. If you are working on a government project and you have not been paid, you are making a bond claim, not a lien claim. The property belongs to the government and it cannot be liened.
On private projects, meaning work for a private owner, a payment bond is optional. The owner may require the general contractor to post one, or the GC may obtain one voluntarily, but there is no legal requirement that they do so on private work.
How Do You Find Out If There Is a Bond?
On public projects, you can ask the government agency that owns the project. They are required to make the bond available for inspection. The general contractor is also required to post a copy of the bond at the job site on some public projects.
On private projects, ask the property owner or the general contractor directly. You can also ask the title company if one is involved. If there is a bond, you want to know as early as possible, because the notice and claim deadlines on a bond are just as strict as the lien deadlines.
How Do Bond Claims Work?
A payment bond is essentially a guarantee from a surety company, typically a large insurance company, that if the general contractor fails to pay its subcontractors and suppliers, the surety will step in and pay the claims up to the bond amount.
To make a claim on the bond, a subcontractor or supplier generally must send written notice to the general contractor within a specific time window after the last date you furnished labor or materials, and file a formal claim with the surety company describing the project, the work performed, and the amount owed.
The specific requirements depend on whether the project is public or private and on the terms of the bond itself. Bond forms vary, and the notice and deadline requirements can differ significantly from project to project. We will not attempt to state the exact time periods on this page because they depend on the specific type of public project and the terms of the bond. What we will say is that the moment you realize you are not going to be paid, contact us. Do not wait.
What Happens If You Miss the Bond Claim Deadline?
The same thing that happens when you miss a lien filing deadline: your claim is gone. The surety will deny it and there is typically nothing that can be done to revive it. This is why we tell clients not to assume that a bond claim is “easier” than a lien. It is a different process with its own strict rules. If you are working on a project and you are not getting paid, contact us as soon as the problem starts.
Can You File Both a Bond Claim and a Lien?
On private projects where a payment bond exists, you generally cannot file a lien against the property, because the bond replaces the lien as your remedy. However, there are nuances depending on whether the bond was properly posted before work began and whether it covers the full contract amount.
On public projects, you cannot file a lien at all because the property cannot be liened. Your remedy is the bond.
These are not always simple questions. If you are not sure which remedies are available to you on your project, that is exactly the conversation to have with us before time runs out.
The General Contractor’s Perspective
We also represent general contractors on public and private projects who are dealing with bond claims filed against them by subcontractors. If a bond claim has been filed against your company, whether or not you believe it is valid, contact us. A bond claim that proceeds to a judgment against the surety has consequences for the general contractor’s bonding capacity and future ability to obtain bonds on public projects. These situations need to be handled carefully.
Frequently Asked Questions
What is a payment bond in Texas construction?
A payment bond is a guarantee from a surety company posted by the general contractor, ensuring that if the GC fails to pay subcontractors, suppliers, and materialmen, the surety will pay their claims up to the bond amount. On public projects, payment bonds are required by law. On private projects, they are optional. When a bond is in place, it replaces mechanic's lien rights as the remedy for unpaid subcontractors.
I'm working on a school district project and haven't been paid. What do I do?
You are on a public project, which means a payment bond was almost certainly required by law. You cannot file a mechanic's lien on government property, but you can make a claim against the payment bond. The notice requirements and deadlines for a public project bond claim are strict, so contact us immediately. Do not wait to see if the GC pays.
Can I file a mechanic's lien AND a payment bond claim at the same time?
On public projects, no, because you cannot lien government property. On private projects where a valid payment bond exists, the bond generally replaces the lien as your remedy. However, whether the bond fully eliminates your lien rights depends on whether the bond was properly posted and covers the full contract amount. This question depends on the facts and requires attorney review.