Basic of Payment Bond Claims in Virginia, Maryland and the District of Columbia
Cash flow and payment related issues continue to be of critical importance on construction projects. We recently posted on Basics of Mechanics Liens in Virginia, Maryland and the District of Columbia. We now turn to basic terms relating to notifications and required actions for payment bond claims in Virginia, Maryland and the District of Columbia. This discussion relates to public projects which are governed by statutory requirements for issuance of payment bonds and claims under those bonds. Private projects sometime have bonds as well; however, the terms of the bonds themselves would generally govern on bond claims on commercial projects. As with the mechanic's lien article, thanks go to Juanita Ferguson, a construction litigator at the firm whose upcoming newsletter article on liens and bonds forms the backbone of this post.
One important point to emphasize is that contractors and subcontractors have the right to file mechanic’s liens if they are not paid on projects involving privately owned property. This is not true on public projects. Instead, the federal government passed the Miller Act requiring payment protection on public contracts as payment security. The various states followed suit by passing their own “Little Miller Act” statutes which we cover here.
Virginia
How much is the bond? For all public projects in excess of $100,000.00, the amount of the main contract.
When is notice required? Anyone who has a contract with the general contractor does not need to transmit notice. Anyone who has a contract with a subcontractor must give notice to the general contractor within 180 days of the last date that work was performed or materials were provided for which payment is claimed.
Is my project covered? If the project is $100,000.00 or less, the project is not covered unless required by the Commonwealth, county, or city responsible for the project.
When do I file a lawsuit? Suit must be filed more than 90 days after the last day that labor is performed or materials are provided but within one year after the date on which the claimant last performed labor or provided materials.
Maryland
How much is the bond? 50% of the total amount due under the main contract.
When is notice required? Anyone who has a contract with the general contractor does not need to provide notice. Any person having a contract with the subcontractor or a sub-subcontractor must provide written notice to the general contractor within 90 days of the last date of providing labor or materials.
Is my project covered? With the exception of highway projects, contracts for less than $100,000.00 are excluded.
When do I file a lawsuit? Suit must be filed more than 90 days after the last day that labor is performed or materials are provided but within one year after the state or municipality accepts the work performed under the primary contract.
District of Columbia
How much is the bond? One half of the total amount due under the terms of the main contract.
When is notice required? Any person who has a contract with the general contractor does not need to provide notice. Any person having a contract with the subcontractor must provide written notice to the general contractor within 90 days of the last date of providing labor or materials.
Is my project covered? If the project is less than $100,000.00 the bond may be waived.
When do I file a lawsuit? Suit must be filed more than 90 days after the last day that labor is performed or materials are provided but within one year from the last date that labor is performed or materials are provided.
A comparison of the jurisdictions reveals that the statutes are thus similar, but not identical, on timing requirements in particular. As we move forward, we will delve into some of the nuances related to mechanics liens and payment bond claims in more detail.
Image by Ian Britton courtesy of FreeFoto.com
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