In the construction industry, those who provide labor and materials are entitled to certain remedies that ensure payment. Contractors and suppliers working on most public works projects in the state of Texas are protected by a payment bond against which the claimant can recover pursuant to Texas’ Little Miller Act. But you might be wondering: How exactly can I make a Texas payment bond claim? Well, you’ve come to the right place!
How to Make a Texas Payment Bond Claim
A payment bond is a surety bond posted by a contractor, typically on public projects, to guarantee that their subcontractors and material suppliers will be paid. If subcontractors, suppliers, or other lower-tiered parties are not paid, the bond provides security against nonpayment. A payment bond claim on a public project is like a mechanics lien filed against a private project. They’ve got specific deadlines, form, and service requirements. But a bond is different from a lien. A bond claim is not against the property itself, but instead against the posted bond.
Payment bonds are required on federal projects of a certain size, and also by every state on public construction projects that meet or exceed a certain specific threshold value. In Texas, the threshold value for municipality or joint board created projects under the Transportation Code is $50,000, while the threshold value for all other federal projects in Texas is $25,000. The required posted bond in Texas is 100 % of the project value.
When is the Deadline to File?
Unlike bond claims in other states, which are single claims, Texas bond claims are made on a recurring basis. Texas’ Little Miller Act requires monthly 2nd- and 3rd-month notices, but the 3rd-month notice is the bond claim itself. Technically, the bond claim itself is called a “Notice of Claim” in Texas. Just another way Texas is a little different…
The bond claim must be mailed no later than the 15th day of the 3rd month after each month in which the claimant furnished labor and/or materials for which they were not paid for. If the 15th falls on a weekend or legal holiday, you’d better send it early! In Texas, deadlines move forward – not backward.
Free Resource
Essential information for any contractor or supplier working on a Texas-based, public project. Click the link to download a free copy of the Texas Monthly Notice Calendar for Public Projects
Who Receives my Bond Claim, and How Do I Send it?
A bond claim must be sent to the general contractor and the surety. But it also might help to send the claim to the awarding authority, too.
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Texas bond claims must be sent by registered or certified mail. A return receipt is requested, but the statutes only require sending the claim – there is no requirement of actual receipt.
What Must the Texas Payment Bond Claim Include?
This depends on whether or not there was a written contract. If there was a written contract, the claim requires a sworn statement of account, which states that the amount claimed is just and correct and that all applicable credits known to the claimant have been allowed. A copy of the written agreement or contract and a statement of the completion or the value of partial completion of the agreement should be attached.
If there was no written contract the claim must include the following: 1) Name of party for who the labor and/or materials were furnished; 2) Date of furnishing; 3) Description of labor and/or materials furnished; 4) the amount due; and 5) itemization of the claim including invoices or other documents.
How Long is the Claim Effective?
If you’re looking to take action to enforce a claim on the contractor’s bond it must be initiated later than 60 days after giving notice of the claim, but less than 1 year after giving notice of the claim or the completion of the project, whichever is earlier.
Conclusion
After your Texas bond claim is sent, the best practice is to check up on the claim and provide any additional information requested in a timely manner. Failure to do so can cause the enforcement deadline to slip by – which renders the claim unenforceable.
Getting paid in Texas isn’t something to take for granted. Since Texas’ notice, lien, and bond requirements are some of the most complex and confusing in the country, it’s very important to be aware of them. We have a lot of resources for Texas that can help you stay informed and get paid!
Learn more: How to Get Paid on Texas Public Projects