Notices and Bond Claims for Texas Public Projects
Furnishing to a public project in Texas? Well saddle up, today’s post is just for you! Let’s review the notice and bond claim requirements for Texas public projects.
Are Payment Bonds Required?
Generally, payment bonds are required for Texas public projects when the general contract exceeds $25,000, and on municipal projects or DOT projects, bonds are required for contracts exceeding $50,000.
Always attempt to obtain a copy of the payment bond from the public entity which contracted the project.
Notices? There’s a Few
Notice of Retainage
Does your contract call for retainage? Serve notice of retainage upon the prime contractor no later than the 15th day of the second month following first furnishing materials or services, stating the total dollar amount to be retained and the general nature of the retainage agreement.
Notice of Specially Fabricated Materials
Are your materials specially fabricated? A Notice of Specially Fabricated Materials may protect the right to serve a bond claim if the materials are not incorporated into the project. Serve notice upon the prime contractor no later than the 15th day of the second month in which claimant received and accepted the order.
Notice of Non-Payment
If you are contracting with a subcontractor, you should serve notice upon the prime contractor no later than the 15th day of the second month following each month in which materials or services were furnished. If you are contracting with the prime contractor, no notice of non-payment is required.
Bond Claim aka Sworn Statement of Account
Serve bond claim notice (sworn statement of account) upon the prime contractor and surety no later than the 15th day of the third month following each month in which materials or services were furnished. When serving a bond claim notice for only retainage, serve bond claim notice within 90 days from completion of the public work contract.
You should serve the various notices & bond claim via certified mail; spring for the extra $ and add on return receipt.
Amanda Garza reviews who should be served and at what address in her article Perfecting Bond Claims on Public Projects in Texas.
Notices to the prime contractor must be sent to the prime contractor’s: (1) residence or (2) last known address.
Notices to the surety must be sent to the surety:
(1.) at the address stated on the bond or on an attachment to the bond;
(2.) at the address on file with the Texas Department of Insurance; or
(3.) at any other address allowed by law.
Bonus: A Lien on Funds? Maybe!
When contracting directly with the prime contractor on a public project that does not exceed $25,000.00, a lien on funds may be available. If contracting directly with the prime contractor on a public project for a municipality or a joint board created under the Transportation Code, that does not exceed $50,000.00, a lien on funds may be available.
You should serve a Lien on Funds upon the public entity and the prime contractor no later than the 15th day of the second month following the month in which materials or services were furnished.
Do you furnish to projects in Pennsylvania? Check out this week’s post on SCCM Numbers and why they matter!
- January 21st: The Basics of the Lien and Bond Claim Process
- January 28th: The Benefits of a Proactive Preliminary Notice & Mechanic’s Lien Program
- February 4th: An Advanced Look at the UCC Process
- February 11th: The UCC – A Powerful but Underused Collection Tool in Construction Lending
- February 18th: An Advanced Look at the Lien and Bond Claim Process
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