The NASBP document titled “Frequently Asked Questions from Bond Producers About Their Role in the Contract Bond Claims Process” is formatted into FAQs and general guidance responses for bond producers when they are faced with the inevitable and various questions from obligees, principals, claimants, attorneys, and the press. These questions and answers do not provide legal advice, but they do provide illustrative guidance to bond producers.
If you haven’t yet read this new resource, you can find it on the NASBP website in the Producer’s Toolbox or you can access it by clicking here.
In order to highlight this new educational tool, NASBP has been featuring in each issue of Pipeline one of the FAQs and the general guidance response to that question. Below is the fourth FAQ and response:
| If a subcontractor files a lien, does he/she still need to make a separate bond claim?
Lien claims and bond claims are separate and distinct actions. A lien claim, which is a claim against the improved real property and, in some jurisdictions, against contract funds, may be “bonded off” after it is filed through a release of lien bond. The lien claimant must comply with applicable state law to establish and enforce its lien. A payment bond claim is a separate claim that the subcontractor can pursue against the bond principal and the surety. The subcontractor, of course, must comply with any conditions set forth in the bond or applicable statute.
In summary, a claimant is better protected if he/she files both a lien claim and a payment bond claim, to the extent he/she has the option to file both. Please note that filing a lien claim may not always be an option. (See Question 2 in the publication titled “Frequently Asked Questions from Bond Producers About Their Role in the Contract Bond Claims Process.”) |
Be on the lookout for a highlighted FAQ and response from this NASBP document in the next issue of Pipeline. NASBP would be very pleased to hear your comments on these FAQs and your suggestions for other FAQs to include in a future version of the FAQs. Share your thoughts about this document at info@nasbp.org.
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