Avoid Common Mistakes and Myths Regarding Liens and Payment Bonds

Here are some common mistakes that I often see suppliers, subcontractors and contractors make in trying to establish a construction lien or claim against the payment bond:

A.        Construction Liens: 

            (1)        The Notice of Furnishing is sent to only the owner’s designee instead of to both the owner’s designee and the general contractor.

            (2)        The Notice of Furnishing is sent at the same time as the Claim of Lien is recorded instead of either;

(a)                before work starts;

(b)               within 20 days after work starts, or

(c)                after the 20 day period, late may not be fatal

            (3)        The Claim of Lien is recorded within 90 days of last invoice date or last warranty work instead of last day of original contract labor or material delivery.

            (4)        The Claim of Lien contains in the first part the day the Claim is signed rather than the first day labor or material is furnished.

            (5)        The Claim of Lien is only recorded but not served on the owner instead of serving a copy on the owner’s designee or owner.

            (6)        The amount of the Claim of Lien includes only signed change orders, instead of all change orders whether signed or not.

            (7)        The Contractor is paid by the owner without a sworn statement instead of based on the contractor’s sworn statement.

 

B.        Payment Bonds:

            (1)        The Subcontractor or Supplier obtains the Payment Bond at the end of their contract instead of before they start.

            (2)        The Subcontractor of a Subcontractor or Supplier to a Subcontractor gives the first notice of furnishing to the general contractor after, instead of within 30 days of their first labor or material.

            (3)        The claim notice (within 90 days after last labor or material) is given to the surety or general contractor but not to the governmental body.

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