How do I get paid after sending notification to the surety?

Alex BarthetBonds

You did the work but didn’t get paid. So you sent your notice of nonpayment and backup documents. Why won’t the bonding company pay? Why is it taking so long?

It’s important to understand that a surety doesn’t work like insurance. When you have a car accident, you submit a claim to your insurance company, and they cut a check. Most sureties, on the other hand, will not pay you voluntarily unless the principal, the bonded contractor, agrees to pay you first.

Hold up. If the contractor agreed to pay you, you wouldn’t have submitted a claim in the first place, right? There lies the tension, between the surety and the principal. This is the reason you haven’t been cut a check. Delays are highly likely. But there are steps to follow and signs to watch for to put yourself in the best position possible to get paid.

First, be aware of bond claim rules and deadlines, and have a system in place to send timely notices.

For private bonded projects

If you have a direct contract with the bonded prime contractor (you are a sub on the job):

  • You do not need to send a first notice to the owner/contractor. However, you should. We recommend having in place a system that automatically processes notices to owners/contractors on every job over a certain amount of money.
  • You need to send notice of nonpayment to the surety or contractor within 90 days of your last day of work or last delivery of materials. This is a hard count – every weekday, weekend day and holidays, too. If the 90th day is a weekend or holiday, it will roll to the next business day. Take note, the surety and the contractor must receive notice by the 90th That doesn’t mean you can wait until the 90th day to mail it.
  • You need to file any suit on the payment bond within one year from your last work on the job or the last delivery of materials.

If you do not have a direct contract with the bonded prime contractor (you are a sub-sub or a material supplier to a sub):

  • You need to send first a notice to the owner/contractor within 45 days of your first work on the job or delivery of materials. This must be received by the 45th day, and every weekday, weekend day and holiday counts. If the 45th day falls on weekend or legal holiday, it rolls to the next business day.
  • You need to send notice of nonpayment to the surety or contractor within 90 days of your last day of work or last delivery of materials. Again, every weekday, weekend day and holiday counts. If the 90th day falls on a weekend or legal holiday, it rolls to the next business day.
  • You need to file any suit on the payment bond within one year from your last work on the job or the last delivery of materials.
  • Check for subcontractor bonds. If you are a sub-sub, the sub-contractor may have its own bond you can make a claim against, in addition to your claim against the prime contractor’s bond. Sub bond timelines are set by whatever it says in the bond. Request the bond in writing from the prime contractor, who is more likely to give you copy than the sub with whom you have a contract.

For State Public Bonded Projects

If you have a direct contract with the bonded prime contractor (you are a sub on the job):

  • You do not need to send a first notice to the owner/contractor. However, you should. We recommend having in place a system that automatically processes notices to owners/contractors on every job over a certain amount of money.
  • No notice of nonpayment required to be sent, but you should still send within 90 days.
  • You need to file any suit on the payment bond within one year from your last work on the job or the last delivery of materials.

If you do not have a direct contract with the bonded prime contractor (you are a sub-sub or a material supplier to a sub):

  • You need to send a first notice to the owner/contractor within 45 days of your first work on the job or delivery of materials. This must be received by the 45th day, and every weekday, weekend day and holiday is counted. If the 45th day falls on weekend or legal holiday, it rolls to the next business day.
  • You need to send notice of nonpayment to the surety or contractor within 90 days of your last day of work or last delivery of materials. Again, every weekday, weekend day and holiday are counted. If the 90th day falls on a weekend or legal holiday, it rolls to the next business day.
  • You need to file any suit on the payment bond within one year from your last work on the job or the last delivery of materials.
  • Check for subcontractor bonds. If you are a sub-sub, the sub-contractor may have its own bond against which you can make a claim, in addition to your claim against the prime contractor’s bond. Sub bond timelines are set by whatever it says in the bond. Request the bond in writing from the prime contractor, who is more likely to give you copy than the sub with whom you have a contract.

With these rules firmly in mind, know also that sending your notice of nonpayment to the surety only starts the claim process. It’s just the beginning. Once you submit, you will typically receive a response, a communication of thank-you-very-much-and-we-will-investigate.

Typically, you will also be asked for more information and a “proof of claim.” This is a sworn statement that includes specific hours, labor, materials, dates, etc.

In Florida, there is no obligation to provide that “proof of claim.” We often advise clients not to send it. In our experience, most sureties are using that “proof of claim” not to support the claim but quite the opposite. It will be used to find reasons to deny your claim. Sending it is your call, but in most instances, we don’t see it advancing the claim process.

Keeping in mind the surety doesn’t want to pay unless the contractor does, what do you need to do at this point?

Be watchful for any document you are sent that shortens the time you have in which to file suit. There are procedural mechanisms that can indeed curtail this window. Receiving a “notice of contest” means they are trying to do just that.

Also beware of the surety waiting you out. You have a year to file suit. Perhaps every couple months you receive a letter saying the matter is still being investigated. Then it’s 13 months from your last work, and the next letter says the claim was denied because it’s time-barred: You can no longer sue us. The suggested deadline to watch is that tenth month, if not sooner. If you haven’t made meaningful progress by then to get paid, consider filing a lawsuit.

Practice the 60-60 rule. Sixty days from the last work submit the notice of nonpayment. For 60 days thereafter, badger your customer and the surety for payment. Make frequent calls. Send emails persistently. Mail letters regularly. In our experience, the louder and more aggressive you can be, the more likely it is you will get paid.

If that doesn’t work, submit your information to a construction lawyer to begin the collection process through a lawsuit. We often file a single-count claim against the bonding company. Unless they have a good defense, they most often want to make this go away. They can evade your personal requests, but when you sue, if they do not assert a defense within 20 days, you win, and they lose.

The delay game comes to an end when you file suit. The surety, through the principal, negotiates to settle the claim, often a swift process. There might be a legitimate reason to hold off on the collection process. Perhaps you have a $20,000 bill and you have ten times that amount of work still out with the same contractor. However, you shouldn’t wait for the sake of waiting. The faster you undertake collection efforts, the faster you will get paid.

Getting paid after sending notification to the surety is possible, but you need to strictly comply with the applicable rules.  And be persistent.