What is a Payment Bond?
On public projects and some large private jobs, a payment bond protects subcontractors if the GC doesn't pay. Here's how it works.
A payment bond is a three-party agreement between the GC (principal), a surety company (the bond issuer), and subcontractors and suppliers (the beneficiaries). It guarantees that if the GC fails to pay subs and suppliers, the surety company will step in and make those payments up to the bond amount.
When is a payment bond required
On federal public projects over $150,000, payment bonds are required by law under the Miller Act. California has its own version — the Little Miller Act — which requires payment bonds on public projects over $25,000. Some private owners and lenders also require payment bonds on large projects as a condition of financing.
How to make a claim on a payment bond
If you haven't been paid and a payment bond is in place: Confirm the bond exists by checking the contract or asking the GC. Provide written notice of your claim to the surety within the required timeframe — in California, generally 15 days after recording a stop payment notice or within 6 months of completing your work. The surety will investigate and, if the claim is valid, make payment.
Payment bond vs. mechanics lien
On public projects you cannot file a mechanics lien against the property (it's government-owned). A payment bond claim is your equivalent remedy. On private projects, both options may be available to you.
Bond claim procedures are complex and deadline-driven. This is general educational information, not legal advice. Consult a California construction attorney if you need to pursue a bond claim.
More in Your Documents
For general educational purposes only. Not legal advice. Consult a California construction attorney for your situation.
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