When a Payment Bond Claim is timely and properly made, it creates a whole new and additional source of funds to potentially recover payment of the debt. For example, in the event of nonpayment, your first line of recovery would typically be a breach of contract claim against the party who hired you. However, when you properly initiate a Payment Bond Claim, you can now look to the Surety to pay the debt if the contractor who hired you does not. The “Payment Bond Claim Process” is also an excellent opportunity to gain leverage in negotiating a resolution of the debt. For example, upon receipt of your Payment Bond Claim, the Surety will immediately notify the General Contractor of the claim and begin investigating whether the money is owed. If the General Contractor cannot raise a legitimate defense to the claim, then the Surety will pressure the General Contractor to pay the claim or pay it itself and look to the General Contractor for reimbursement. When the Payment Bond Claim Notices are prepared in the form of Payment Demand Letters, the Process can be used to educate all of the involved parties of your legal rights and the steps that you intend to take to enforce payment in the event the claim is not immediately paid.
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