Construction bonds are used to guarantee that one party will be compensated if the other party does not meet its obligations on a federal project. These are used instead of a mechanics lien because a mechanics lien can only be attached to a private property, not on public government projects.
Usually, there are three parties to a construction bond. The bond company is the guarantor, the government office is the party who owes the obligation and the general contractor is the principal. If the general contractor does not complete the project, the bond company pays the government.
Payment bonds are a common type of construction bond. They are most similar to mechanics liens. All general contractors working on projects for the government are required to purchase a payment bond.
In the event the general contractor defaults on a project, the payment bond provides a pool of money that subcontractors and material suppliers can draw from.
In Florida, a payment bond must be received more than 45 days after the claimant first provides labor or materials for the project and within 90 days of last providing labor or materials for the project. If the claimant files a lawsuit, it must be initiated within one year.
The bond claim, also called a Notice of Nonpayment, must include the name and address of the prime contractor, the name and address of the surety, a description of the labor, services and materials provided, a description of the property, the unpaid amount and other information.
Construction payment bonds can be complex, but an experienced construction law attorneys can provide representation and advice.