FAQs (Frequently Asked Questions)
are now seen on numerous websites to answer the most common questions on a
topic. The following are Construction Law Comments Public Work Payment Bonds FAQs.
Q. On which
A. By statute a general contractor must furnish a payment bond on public work projects when the amount of the contract for a Commonwealth project is over $5,000 or when the amount of a contract for any county, city, town, district or political subdivision of the Commonwealth or other public instrumentality project is over $2,000. In addition, subcontractors must furnish payment bonds on all building contracts subject to 1) M.G.L. c. 149, §44A-H where the subcontractor is either a filed subcontractor and the general contractor requests the bond in its general bid or where subcontractor prequalification is required or 2) M.G.L. c. 149A, the new alternative method of Construction Manager at Risk, where the subcontractor is designated as a Trade Contractor.
Q. Which parties have the protection of the general contractor’s payment bond?
A. All tiers below the general contractor that are furnishing labor or labor and materials and a material supplier to a party furnishing labor for the project are afforded payment bond coverage under the general contractor’s payment bond.
Q. Are there any time requirements as to notice and filing a court proceeding to recover on the general contractor’s payment bond?
A. Any party afforded protection by the general contractor’s payment bond must commence suit within one year after the date on which that party last furnished labor and/or materials included in the claim. In addition, any party afforded payment bond protection that does not have a direct contract with the general contractor must give written notice by certified mail to the general contractor within sixty-five days after the date on which the claimant last furnished the labor and/or materials stating the amount claimed and the name of the party for whom such labor and/or materials were furnished.
Q. If in addition to the general contractor’s payment bond, a subcontractor has furnished a payment bond, can a party furnishing labor and/or materials to the subcontractor recover on the subcontractor’s payment bond?
A. Any party furnishing labor and/or materials to that subcontractor must file its claim on the general contractor’s payment bond if that subcontractor is listed as a filed subcontractor pursuant to c. 149, §44F(1) or a Trade Contractor pursuant to c. 149A §8. Under these circumstances the filed subcontractor’s/Trade Contractor’s payment bond is a payment indemnity bond for the benefit of the general contractor, if and when the general contractor pays a claim attributable to the subcontractor’s/Trade Contractor’s failure to pay for labor and/or materials. In all other instances where a subcontractor has furnished a payment bond on a public works project, a party furnishing labor and/or materials to that subcontractor may make claim on the general contractor’s payment bond and/or the subcontractor’s payment bond.
This newsletter is intended to
provide general information of interest to the construction industry. It is not
intended to provide specific legal advice or to address fact specific issues.
For that you should consult your legal counsel. Corwin & Corwin LLP assumes
no liability in connection with the use of this newsletter. The
©1992-2005 Corwin & Corwin LLP. All rights
reserved.