The Public Project Alternative
A mechanics lien works by holding the physical property hostage until you get paid. But what happens if the general contractor stiffs you on a public high school, a state highway, or a federal courthouse?
The Sovereign Rule: You cannot legally file a mechanics lien against public property. The government will never allow a private subcontractor to foreclose on a public school or a military base to settle a debt.
To solve this, the law created the Payment Bond Claim. Instead of filing a claim against the physical dirt and building, you file a claim against a massive pool of money (the payment bond) provided by a surety company.
How a Payment Bond Works
Before a general contractor is awarded a major public contract, the government requires them to purchase a Payment Bond from a surety company. This bond acts as an insurance policy that guarantees all subcontractors and suppliers will be paid.
If the GC fails to pay you, you file a 'Bond Claim' directly with the surety company. The surety investigates the claim. If it is valid, the surety pays you directly out of the bond funds, and then the surety aggressively goes after the GC for reimbursement.
The Miller Act vs. Little Miller Acts
Bond claims are governed by specific federal and state laws.
- The Miller Act: Governs federal projects. It requires a payment bond for any federal construction contract exceeding $150,000. Second-tier subcontractors must provide a 90-day preliminary notice to make a claim.
- Little Miller Acts: Every state has its own version of the Miller Act governing state, county, and municipal projects. The deadlines and notice requirements vary wildly from state to state.
Common Mistakes on Bond Claims
- Filing a Mechanics Lien on Public Land: This immediately marks you as an amateur. The county clerk will reject it, and you will waste valuable time.
- Missing the Bond Notice Deadlines: Just like mechanics liens, bond claims require preliminary notices. If you fail to serve your notice to the GC and the surety within the statutory window, you lose your right to claim against the bond.
- Not Requesting the Bond Copy Early: Subcontractors have a legal right to request a copy of the payment bond. You need this to know the name of the surety company. Do not wait until you are unpaid to ask for it.