How to Make a Texas Payment Bond Claim

Public Projects

Hired by the Subcontractor

    • Step 1

      Optional

    • Request the Payment Bond Information

      If you do not know the name and/or address of the Surety and/or the Payment Bond Number, serve a formal Request for Information to the Governmental Entity or the General Contractor.  Upon receipt of the Request, the Governmental Entity and/or the General Contractor is required to provide the requested information within a reasonable period of time (typically 10 days), or as a penalty, is required to reimburse you for the reasonable costs incurred to obtain the information from another source.  Learn more about requesting Payment Bond Information.

      Inside Tip 1

      The Request to the Governmental Entity is more formal than the Request to the General Contractor and may take longer to obtain the information.  To potentially increase your odds of quickly obtaining the information, you should consider requesting the information from both the Governmental Entity and the General Contractor.

      Inside Tip 2

      The Request for Information to the General Contractor can be made independently or through the Notice of Retainage Agreement or the Second Month Notice of Claim.  The Lien Professor’s Payment Bond Claim Kit includes a Request for Information as an independent document and we have also incorporated the Request into the Notice of Retainage Agreement and the Second Month Notice of Claim.

    • Step 2

      MANDATORY

    • Serve the Notice of Retainage Agreement

      If your contract allows the Subcontractor who hired you to withhold contractual retainage from your progress payments, then you must serve the General Contractor with Notice of the Retainage Agreement by no later than the 15th day of the second month from when you first provide labor and/or materials to the Project.  This is the first of two notices which must be timely served in order to perfect a claim for retainage against the Payment Bond.  Note – this Notice only applies to claims for withheld retainage and not unpaid progress payments.  Learn more about the Notice of Retainage Agreement or a question.

      Example

      If you first provided labor and/or materials in January, then you must serve this Notice before March 15 by certified or registered mail to the General Contractor.

      Practice Pointer

      It is good practice to include with the Notice a copy of the retainage provision from the contract.

    • Step 3

      MANDATORY

    • Serve the Second Month Notice of Claim

      If you have not been paid for your labor and/or materials, then you must serve the General Contractor with the Second Month Notice of Claim by no later than the 15th day of the second month from each and every month that you provided labor and/or materials to the Project and have not been paid.  This is the first of two notices that you are required to serve to perfect a claim against the Payment Bond for unpaid progress payments.  Learn more about the Second Month Notice of Claim.

      Example

      If you provided labor and/or materials in January and February and were not paid, then for the work performed in January you must serve the Notice by no later than March 15; for the work performed in February, you must serve the Notice by no later than April 15.

      Inside Tip 1

      In the above scenario, you could combine the two Notices into one Notice if sent before March 15th, which would be before the 15th day of the second month for the work performed in February.  Remember, you can always serve a Notice early, just not late.

      Inside Tip 2

      Consider including in this Notice a request for the bond information if you do not have it.  That way, in the event you have to send the Third Month Notice of Claim you will already have the necessary information.  Our Second Month Notice of Claim includes the necessary statutory language used to compel the General Contractor to provide the Payment Bond information.

    • Step 4

      MANDATORY

    • Serve the Third Month Notice of Claim

      All Subcontractors and Material Suppliers must serve the Surety and the General Contractor with the Third Month Notice of Claim by no later than the 15th day of the third month from each and every month that you provided labor and/or materials to the Project and have not been paid.  This the second of the two Notices that must be served (unless correctly combined into one Notice) to make a Claim for unpaid progress payments.  Learn more about the Third Month Notice of Claim.

      Example

      If you provided labor and/or materials in January and were not paid, then you should have served the General Contractor with the Second Month Notice of Claim referenced above.  Now you must serve the General Contractor and the Surety with the Third Month Notice of Claim by the 15th of April for it to be timely.  If you performed work in February and were not paid, you can include that amount in this notice as well without serving the Second Month Notice of Claim since you will be sending this Notice before the second month deadline.

      Warning

      The deadline to serve a Notice is not extended if the 15th falls on a Sunday or legal holiday.  Therefore, if your deadline falls on one of these days, you must serve the Notice on the preceding business day for it to be timely.

    • Step 5

      MANDATORY

    • Serve The Notice of Claim for Retainage

      If your contract allows for the withholding of contractual retainage from your monthly progress payments and the retainage has not been timely paid, you must serve the Surety and the General Contractor with the Notice of Claim for Retainage by no later than the 90th day from completion of the Project as the second step to making a Claim against the Payment Bond for unpaid retainage.  Your first step was to serve the Notice of Contractual Retainage as discussed above in Step 2. Learn more about the Notice of Claim for Retainage.

      Inside Tip 1

      You can include your Claim for unpaid contractual retainage in the Third Month Notice of Claim if the contractual retainage is due at the time you serve the Notice.  The Lien Professor’s Payment Bond Claim Kit contains an independent Notice of Claim for Retainage and a Third Month Notice of Claim with Retainage.

      Inside Tip 2

      You should consider including a Payment Demand in this Notice directed to the Subcontractor who hired you, threatening to sue for breach of contract and threatening to sue the Surety under the Payment Bond. By doing so, it may create some leverage with enforcing payment.  The Lien Professor’s Payment Bond Claim Kit includes two versions of this Notice: one drafted in a non-confrontational tone and the other as a strong Payment Demand Letter.

    • Step 6

      Optional

    • Serve the Pre-Lawsuit Payment Demand Letter

      You might consider serving the contractor who hired your with a Pre-Lawsuit Payment Demand Letter, demanding payment and advising of your intention to file a Lawsuit for breach of contract, Trust Fund violations, and violation of the Prompt Payment Act.  The Lien Professor’s Payment Bond Claim Kit includes a Payment Demand Letter specifically designed for this purpose.

      Inside Tip

      If you are sending a Payment Demand Letter just prior to filing a Lawsuit, you should consider retaining a Construction Lawyer to prepare and send the letter for you.  Doing so will make you appear more credible and let the debtor know that you are serious about your threat to file a Lawsuit.  To learn more about having Lovein | Ribman, P.C. prepare your Payment Bond Claim documents or a Payment Demand Letter, see click here.

    • Step 7

      MANDATORY

    • File the Lawsuit

      You must file a Lawsuit to enforce payment under the Payment Bond by no later than 1 year from when you timely served Notice of your claim to the Surety/General Contractor.  If you fail to file a Lawsuit within this time period, you will waive your rights under the Payment Bond.  In the Lawsuit, you will want to name the Surety and the General Contractor as defendants.  Click here to learn more about having Lovein | Ribman, P.C. file a Lawsuit for you.

      Inside Tip

      If you fail to file the Lawsuit within the above deadline, you can still sue the General Contractor for breach of contract for up to four years from the date the contract was breached.

The Lien Professor’s Payment Bond Claim Kit includes all of the Documents that you need to perform all of the above-referenced steps up until filing a Lawsuit. Alternatively, you can click here to learn more about having Lovein | Ribman, P.C. prepare the Documents or File a Lawsuit for you.