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In this blog post, we will look at the concept of payment bond claims and discuss the importance of serving a Notice of Nonpayment for both private and public projects.
What is Payment Bond Claim?
Payment bond claims in Florida are legal mechanisms that allow contractors, subcontractors, and suppliers working on public projects to seek payment for their services if they are not compensated by the bonded contractor. These claims provide a means to assert their rights and ensure timely payment for the work performed.
How to file a Payment Bond Claim?
To file a payment bond claim in Florida, follow these steps:
Step 1 - Review the Bond
Obtain a copy of the payment bond related to the project. It is typically provided by the public entity or the bonded contractor.
Step 2 - Serve a Notice of Nonpayment
Within 90 days of your last work on the project, serve a Notice of Nonpayment to the contractor and surety via certified mail. Include necessary information such as your name, address, a description of the work performed, and the amount owed. Further in the article, you will find in-depth information about the Notice of Nonpayment.
Step 3 - Wait for Payment
Allow a reasonable time for the contractor to make payment after receiving the Notice of Nonpayment. If the payment is received, the process ends here.
Step 4 - Prepare the Payment Bond Claim
If payment is not received within a reasonable timeframe, gather documentation to support your claim, including invoices, contracts, and evidence of work performed.
Step 5 - File the Claim
Prepare the payment bond claim form, which typically requires details such as your name, address, the amount owed, and a description of the work. Submit the completed claim form, along with supporting documentation, to the surety company that issued the bond.
Step 6 - Follow Up
Keep track of your claim and maintain communication with the surety company. They may require additional information or documentation to process your claim.
Note: Understanding the importance of serving a Notice of Nonpayment, being knowledgeable about exemptions, and project bonding requirements is vital for contractors, subcontractors, and suppliers. These factors play a significant role in protecting their rights and ensuring that they receive timely payment. Let's delve into each aspect in detail.
What is Notice of Nonpayment?
The Notice of Nonpayment itself is not considered a payment bond claim in Florida. Rather, it is a crucial step in the process of asserting a payment bond claim. The Notice of Nonpayment serves as a formal notice to interested parties, such as the contractor and surety, indicating that payment has not been received for work performed on a public project. It is a prerequisite to initiate a payment bond claim if the contractor fails to make payment within the specified timeframe.
In situations where you are owed money on a public or private bonded job, or if you are a subcontractor or supplier awaiting payment, serving a Notice of Nonpayment becomes essential. This notarized document, similar to a Claim of Lien, contains slightly less information but is equally significant. After preparation and notarization, it must be sent to the interested parties involved in the project, including the surety and contractor.
Who needs to send Notice of Nonpayment for Private Projects?
On private bonded projects, it's important to determine whether your contract is with the bonded contractor. If not, you must send a Notice of Nonpayment within 90 days of your last work. For instance, if you are a plumber with a contract with the contractor who has a bond on the private job, you are exempt from sending the initial Notice to Contractor. However, it remains advisable to send a Notice of Nonpayment within the specified timeframe.
Who needs to send Notice of Nonpayment for Private Projects Public Projects?
Like private projects, the same rules apply to public projects. Regardless of whether you are required to serve a Notice to Owner, it is best practice to record a lien and serve a Notice of Nonpayment within 90 days of your last work on the job.
What is the Notice of Nonpayment submission timeline?
Timely Submission and Receipt of Notices is extremely crucial to meet the requirements. The Notice of Nonpayment must reach the contractor and the surety no later than 90 days from the last work performed. Counting the 90 days is identical to the Claim of Lien process, including weekends and holidays. If the 90th day falls on a weekend or legal holiday, the deadline extends to the next business day.
Unlike a recorded document, the Notice of Nonpayment is simply sent via certified mail. However, sending it via overnight mail within seven days of the deadline can serve as a precautionary measure to avoid any mishaps with certified mail. Reliable options include FedEx, priority mail, or certified mail.
What is Last Work in the context of Notice of Nonpayment?
Defining "Last Work" in the above context aligns with the criteria set for the Claim of Lien. Activities such as punch-list work, warranty work, or obtaining an inspection pass do not count as last work. Instead, it must be substantive work, such as approved change order work, that marks the final day of work under the lien and bond statute.
What are the Notice of Nonpayment Exemptions?
Here are the exemptions -
- Privity with a bonded public contractor exempts you from serving a Notice of Nonpayment.
- Even though not required, it is advisable to consistently follow the practice of serving a Notice of Nonpayment. For instance, if you are a plumber contracted with a bonded contractor on a school board project, you have rights on the bond without needing to serve a Notice of Nonpayment.
Are all Public Projects Bonded?
Not Every Public Project is Bonded It is essential to understand that not all public projects are bonded. Certain thresholds exist to determine whether bonding is mandatory. In Florida, for instance, projects under $200,000 are not required to be bonded. Projects ranging from $200,000 to $400,000 depend on the discretion of the municipality, while projects over $400,000 must be bonded. Therefore, it is crucial to verify the existence of a bond before commencing work on a public project.
Conclusion
Payment bond claims hold immense importance in the realm of public projects. Contractors, subcontractors, and suppliers can safeguard their rights and guarantee prompt payment by comprehending the criticality of serving a Notice of Nonpayment. It is crucial to adopt a proactive approach to secure payment while working in the construction industry.
