There are five fundamental legal methods that you can use to enforce payment on a government owned Property: (1) serve the Second Month Notice of Claim to the General Contractor and the contractor who hired you; (2) serve the Third Month Notice of Claim to the Surety, the General Contractor, and the contractor who hired you; (3) Serve the Notice of Claim for Contractual Retainage; (4) serve a Payment Demand Letter to all interested parties; and (5) file a Lawsuit to enforce payment under the Payment Bond. All of these options can be used independently; however, they are most effective when used in combination with one another at the appropriate time in the Payment Bond Process. Read below to learn more.
Serve the Second Month Notice of Claim: Anyone not hired directly by the General Contractor must first serve a Second Month Notice of Claim on the General Contractor before making a claim against the Payment Bond. This is an excellent opportunity to solicit the General Contractor’s assistance with forcing the contractor who hired you to pay the debt. When this Notice is written in the form of a strong Payment Demand Letter, it can be a very effective method of enforcing payment. The Lien Professor’s Payment Bond Claim Kit includes two versions of this mandatory Notice.
Serve the Third Month Notice of Claim: All Subcontractors, Material Suppliers, Architects, Engineers, and/or Laborers, who have not received a progress payment or final payment (other than retainage) must serve the Third Month Notice of Claim to the Surety and the General Contractor before filing a Lawsuit to enforce payment under the Payment Bond. As with the Second Month Notice of Claim, when this Notice is written in the form of a strong Payment Demand Letter, it can increase the probability of enforcing payment without filing a Lawsuit. The Lien Professor’s Payment Bond Claim Kit contains a Third Month Notice that has been specifically drafted with this strategy in mind.
Serve Notice of Claim for Retainage: If the remaining amount owed to you is purely for unpaid contractual retainage, then you must serve the Notice of Claim for Retainage before filing a Lawsuit. Again, as with the other Pre-Lawsuit Notices, this is an excellent opportunity to demand payment.
Serve a Payment Demand Letter: A Payment Demand Letter is a very effective tool that can be used independently and in conjunction with making a Payment Bond Claim. By serving a Payment Demand Letter, you are attempting to force one of the interested parties to put pressure on the nonpaying contractor to pay the debt. Additionally, a Payment Demand Letter can be sent to the Surety, the Contractor, and the Public Entity before you file a Lawsuit to enforce payment under the Payment Bond. To learn more about what information should be included in a Payment Demand Letter and how to effectively use it, see “What is a Payment Demand Letter?”
File a Lawsuit: If you failed to serve all of the necessary Payment Bond Claim Notices, then besides serving a Payment Demand Letter, your remaining option is to file a Lawsuit against the party who hired you for breach of contract. On the other hand, if you served the necessary Payment Bond Claim Notices and have still not been paid, then your next step is to file a Lawsuit to enforce payment under the Payment Bond and for breach of contract. Click here to learn more about retaining Lovein | Ribman, P.C. to file a Lawsuit.
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