Construction Law

Payment Bonds: Unconditional

In the construction industry, a payment bond is like a security blanket. It is posted by the contractor in charge of the construction contract, and it is a guarantee that all subcontractors, sub-subcontractors, and material providers will be paid for their services or products that they provided on construction projects. As Jacksonville construction lawyers, we know that payment bonds are typically only used on public projects. However, in some cases they are needed for private projects if requested by the owner to steer clear of a lien being placed on the property. If this is the case, there are two types of bonds that can be used, unconditional and conditional. In this article we will be discussing unconditional payment bonds.

What Are Unconditional Payment Bonds?

When an unconditional payment bond is being used, it means that the owner will be excused from a lien being placed on their property. What will happen instead, is that the subcontractors, sub-subcontractors, and material providers will have the ability to file a claim against the bond, regardless of whether or not payments are made to the contractor.

Steps to File an Unconditional Payment Bond to Recover Non-Payment

In the situation of having an unconditional payment bonds, there are specific steps that must be followed to recoup non-payment.

1. For property to be not subjected to a construction lien, the payment bond is required to be documented in the same time period as the notice of commencement.
2. Within 45 days of first beginning labor or providing materials, the lienor not privity with the contractor must serve a notice to the contractor (Florida Statute 713.23). However, if step one is not followed and the bond is not documented with the notice of commencement, the lienor has 45 days from the time they were given a copy of the bond to give notice to the contractor.
3. Provide the contractor and the surety a notice of nonpayment within 90 days of concluding the supplement of labor and materials.
4. File a claim against the unconditional payment bond, within a year of the final furnishing of services or labor.

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Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.