To safeguard the monetary well-being of suppliers, workers, and subcontractors engaged in a project, a labour and material payment bond is an essential part of the construction business.
Can Subcontractors View the Labour and Material Payment Bond for a Project?
Subcontractors do have the right to ask for and view a Labour and Material Payment Bond. Because it enables suppliers and subcontractors to verify that a bond is in place and that they are covered by it, this right is particularly significant. Understanding how is a performance bond different from a labor and materials bond can also help subcontractors distinguish between protections that guarantee payment for labor and supplies versus those ensuring project completion. They can identify the surety company in charge of the bond and comprehend the extent of their protection by being aware of the bond terms. Access to the bond enables subcontractors to get ready to act quickly if they are not compensated for their labour or supplies.
When is it appropriate to ask for a copy of a bond for labour and material payment?
Asking for a copy of the bond is both reasonable and required in several situations. Above all, it is prudent for a supplier or subcontractor to take prompt action in the event of a payment delay or concern.
- preferably at the beginning of the subcontract, or as soon as there are indications of payment problems, a copy of the bond should be requested.
- Requesting a bond is primarily done to verify the bond’s existence and terms of protection.
- To determine which surety company is in charge of paying claims.
- To be aware of the deadlines and steps involved in filing a claim.
A subcontractor or supplier will be prepared to respond within the necessary timeframes if they receive this information as soon as possible.
Three Things to Consider When Filing a Claim Under a Normal Labour and Material Payment Bond
1. Deadlines Are Important: There are typically deadlines for submitting a claim for labour and material payment bonds. These due dates change according to the bond’s conditions and the kind of claimant. For example, within 60 to 120 days following their last day of work or material delivery, a subcontractor may be required to give written notice of a claim.
- Notice Requirements: Most of the time, a written notice must be sent to the contractor and surety before a formal claim can be made. If a claimant doesn’t get this notice, they could lose their right to seek compensation, even if they are owed money.
3. Give the Right Documents: Claimants should be ready to send in detailed documents, such as contracts, invoices, and records of work done or materials provided. The claim is stronger the more clearly a subcontractor can show the work that was done and the amount owed.
What is a Notice of Claim?
A Notice of Claim is the official way for a subcontractor, supplier, or worker to tell the contractor and the surety that they want to get paid under the bond.
This notice is not merely a formality; it is a legally mandated step in the claims process that needs to be completed correctly to protect the claimant’s rights. Important details like the amount claimed, the type of work or materials supplied, and the dates of service must typically be included in the notice.
