If you’re unpaid for labor or materials furnished to a state or federal construction project, the most effective way to get paid and preserve your right to payment is to properly file a payment bond claim. On state projects, this is referred to as a “Little Miller Act Claim,” and on federal projects it’s called a “Miller Act Claim.”
Recover Payment from the State or Federal Government
Unlike on privately owned construction projects, you’re unable to file a mechanic’s lien if unpaid on a state and federal project. The rationale is simple: you can’t lien and get a privilege against state or federally owned property. Instead, payment bonds are issued at the start of most state and federal projects, and any unpaid parties can file a lien against the payment bond.
Payment Bond claims are sometimes preferable to mechanic lien claims, because payment bonds are never over-mortgaged. If there’s a payment bond on the project and you timely assert your claim, you have an excellent chance at getting paid.
The trick is making sure your payment bond claim is asserted properly and timely.
While there are many forms out in the marketplace, it can be a huge mistake to file a payment bond claim pro se. The Miller Act and applicable Little Miller Act (which governs bond claims on state and federal projects) can be very complex, and you make huge mistakes by filing without the assistance of counsel. Plus, having a lawyer prepare your bond claim means you can get legal advice about your specific bond claim rights, the dollar value of your claim, the type of claim you should file, and more.
What is a Construction Payment Bond?
A construction payment bond is a contract bond that guarantees suppliers, laborers and subcontractors get paid for their work and materials even if the primary contractor fails to fulfill this obligation directly. Such a bond is usually issued alongside a performance bond that assures there is money to pay a substitute if the work of a contractor never gets done.
When dealing with the federal or state government, however, these bonds are governed by statute.
The Miller Act stipulates that prime contractors on many federal government constructions projects must put up bonds to guarantee they will perform their duties and pay their subcontractors and suppliers.
Sovereign immunity makes it impossible for subcontractors and suppliers to place a mechanic’s lien in relation to government work, meaning that the ability to place a Miller Act payment bond claim is essential. Suppliers and subcontractors would be unlikely to accept work on government projects without the assurance that they can file for a bond lien if the general contractor doesn’t pay as agreed.
Filing Correctly Matters
For state government contracts, each state has adopted its own rules regarding bond requirements and the placing of a bond claim. Often called Little Miller Acts, these state government statutes vary slightly from state to state.
The process of filing a bond claim can very complex and time consuming. Governmental bodies often act slowly and won’t act at all unless a properly completed claim is filed. Trying to get what you’re owed from a construction payment bond can take time away from your work growing and sustaining your business.
Choose Experienced Legal Counsel
Choosing the right legal counsel to help you file your claim can mean the difference between success and failure. With a lawyer on your side, you also benefit from his or her expertise and advice, something you won’t have if you try to go it alone.
Federal and state requirements for a construction payment bond to be in place on construction projects are intended to protect companies like yours, but that doesn’t mean getting paid is easy. With the right help, however, you can get what’s yours.