Payment Bond Claims

Mechanics Liens cannot be placed on public property. So, what remedies are available to subcontractor’s, material suppliers and design professionals who are not getting paid for work or materials furnished for schools, public buildings, streets or highways for State, County or local government projects? In addition to serving a Public Funds Lien, there is the statutory right to make a Payment Bond Claim against the surety issuing the Payment Bond.

Illinois law requires public entities to make general contractors post Payment Bonds for public projects that cost over $50,000.00. In the event the suppliers, subcontractors or sub-subcontractors do not get paid for their work or materials, Payment Bonds can protect them if they file a Bond Claim within the greater of the time allowed by the Bond or the Illinois Public Construction Bond Act, 30 ILCS 550/1, et. seq.

Payment Bonds are a very effective remedy for several reasons. First, the claim is asserted against an insurance company. A general contractor’s bankruptcy or insolvency will, therefore, not be an obstacle to collecting an award. So a claimant normally need not worry about the collectability of a judgment or award. Second, Bond Claims provide an additional or alternative source of funds from which to collect what is due for work or materials that have been provided without regard to the financial viability of the general contractor. Third, Bond Claims are not limited to subcontractors who have a contractual relationship with the bonding company or even the general contractor. And fourth, like Public Funds Liens, Payment Bond Claims do not subject subcontractors to the strict time requirements necessary to perfect a Mechanics Lien on private property.

Asserting a successful Payment Bond Claim requires an understanding of the various notice requirements that must be met in order to satisfy the statutory requirements of the Illinois Public Construction Bond Act.

At The Law Offices of Frederick A. Lurie, we have the knowledge and experience to successfully assert and prosecute Payment Bond Claims. Contact us to find out of you still have Bond Claim rights.