Liens and Bonds

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Construction Liens and Bonds

Contractors, material suppliers, equipment suppliers, and laborers have the normal collection methods available to almost any business. However, these same people have a wealth of special statutory procedures to improve their chances of being paid. Most common are the construction (or mechanics) liens on private jobs, and claims on bonds for public (and some private) jobs.

Differences between Public / Private Jobs

The difference between public and private jobs is basic to collecting for construction work. Long ago most state legislatures enacted mechanics lien laws allowing laborer and material suppliers to assert a lien against private jobs for the value of labor and materials supplied. However the laws did not allow them to do the same for public jobs. The solution the Federal and State legislatures adopted was to require a payment bond supplied by the contractor to ensure that the laborers and material suppliers were paid.

Furthermore, the legislatures wanted to make sure that the contractor performed, and thus, required the contractors to post performance bonds insuring that the contractor would perform the contract.

Private Construction Jobs - Covered by Liens. (Lien Laws - 50 states)
Federal Construction Jobs - Covered by The Miller Act (bonds)
State and Local Construction Jobs - Covered By Bond Requirements

Link to Lien Laws in all 50 States

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