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When to File a Mechanic’s Lien Versus a Bond Claim

In most cases, deciding whether to file a payment bond claim or a mechanic’s lien claim is simple because only one option is available. On unbonded private projects, the general rule is unpaid subcontractors or suppliers can file a mechanic’s lien against the project jobsite. A mechanic’s lien claim asserts a security interest in the title of the property itself. These claims typically must be filed with the recorder’s office in the county where the property is located, and the claims usually are asserted against the owner’s interest in the property.

On a state, county, municipal, government or federal construction project, subcontractors and suppliers can file a bond claim. Government entities are not going to give up interest in public property to a construction or building materials supply entity. It is virtually impossible to claim an interest in the underlying jobsite property when unpaid on a government project. The lien-like remedy, therefore, is the bond claim.

When the public project meets certain criteria (usually, when the contract amount is more than $25,000 to $50,000 (or $100,000 on federal projects), the laws require the contractor to post a payment bond for the benefit of subcontractors and suppliers. Anyone not paid can make a claim against the bond–not the property–for payment. Knowing whether a construction project is private or public and whether it is bonded is very important. A good practice is to obtain a copy of the bond.

If a contractor on a private construction project has posted a payment bond, subcontractors and suppliers can file a bond claim instead of a mechanic’s lien. Private owners may require bonds on large, complex commercial developments or when they perceive the risk outweighs the cost of the bond. While the majority of private projects are not bonded, always ask. Even when a private construction project is bonded, the right to file a mechanic’s lien claim is usually still intact. The only difference is that the lien may be bonded off soon after filing. In fact, in some circumstances, bond claims may be preferred to lien claims.

Written by:Scott Wolfe Jr.See more at http://www.zlien.com

 

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