Construction Bond Law

At Warner, Sechrest & Butts, our expert construction attorneys will walk you through construction bond law, as well as help you understand how it may impact you as a professional involved in a construction project.

The Basics of Florida Construction Bond Law

Florida construction bond law deals with suretyship - that is, the legal method of securing performance of a contract. Bonds are written statements aimed to secure payment for damages, nonperformance and other conditions. There are three major parties involved in construction bond law. A construction lawyer in Gainesville can help you understand these three-party agreements and how your role and legal rights intersect.

Party Roles & Responsibilities

The parties involved in construction bond law include the principal, the surety, and the obligee.

The principal is typically the person who performs a scope of work for a construction project. This can be a contractor or a primary trade subcontractor. If the principal fails to perform his/her duties and/or provide necessary materials, the surety is responsible. The surety’s level of liability is totally dictated by the liability of the principal. The surety is, in a sense, the creditor of the principal once the obligations of the bond are discharged. Meanwhile, the bond is written in favor of the obligee. In other words, he/she is obligated to some form of payment from the surety as a result of failed practices by the principal. The obligee is typically the owner of a project. Florida construction law firms can help you grasp a comprehensive understanding of such general rules of suretyship to determine where you stand.

Types of Bonds

In the construction industry, there are generally four common types of bonds:

Bid Bonds

Bids are popular in the construction industry. While they are typically required for public work, bid bonds can be seen in private cases as well. Bid bonds require the principal to perform work or execute a contract in accordance with a bid.

Performance Bonds

Performance bonds are designed to guarantee completion of a construction project or task. The contract binds each party to a certain sum of liability. This means that if an obligation specified within a performance contract is not met, money is owed. It should be noted that the surety has unique rights in performance bonds. A Gainesville construction lawyer can help you understand how the rights among parties vary depending on the type of bond at hand.

Payment Bonds

Florida statutes authorize payment bonds for state, county and municipal work. Payment bonds provide a sense of security for subcontractors, laborers and suppliers, mostly because public property cannot receive lien claims.

Transfer Bonds

A lien (a claim that is placed against a piece of private property to collect owed funds) can be transferred into a bond (an alternative way to secure funds). The transfer bonds require the same amount of the lien, plus a three-year interest (or 25 percent of the lien amount). Transfer bonds go into public records.

Statutory Payment Bond Claims

In Florida construction bond law, there are notices that must be served (to all preceding chains of labor to be safe) and strict deadlines in which to file such documents. The following notices must be filed and delivered to the appropriate party depending on the type of bond.

  1. Preliminary Notice of Intention to Claim Against the Bond (Notice to Contractor)
  2. Notice of Performance and Nonpayment (Notice of Nonpayment)

After these notices are delivered and filed, claimants do have the right to file suit against the surety to recover the payment. The claimant has one year to do so.

Special Waivers & Releases

Florida statutes governing construction bond law allow for the following waivers and releases: 

  1. A claimant may not waive his rights to bring a claim against a payment bond in advance of performing services or providing materials.
  2. A claimant may waive, release or satisfy all or part of his claim through a specific date, and as conditioned expressly specified at the time of the waiver, release or satisfaction of lien.

Other Considerations

Surety bonds only work when they are accurate, clear, specific and timely. Any bond that is fabricated or not properly recorded will be considered invalid and impermissible.

Implications of Construction Bond Law

If you are a professional in the construction field, or if you provide services and goods to parties involved in the construction field, understanding the basics of Florida construction bond law is advantageous. Through bond law, you can protect yourself and secure compensation for your work, materials and contributions to a construction project. And for professionals who are required to provide pay to multiple parties for their work on a construction project, understanding construction bond law helps to minimize risks, lessen potential liabilities and ensure that the management of a particular project is effective. Whether you are an owner, developer or contractor, construction bond law affects you and Gainesville construction lawyers can help.

Construction Attorneys in Gainesville, FL

To learn more about bond claimant's or bond provider’s rights and responsibilities, especially as it pertains to your specific circumstance, it is vital that you consult with a construction attorney in Gainesville, FL. At Warner, Sechrest & Butts, our Florida construction attorneys will thoroughly investigate the matters regarding your construction project and inform you of your legal rights and responsibilities moving forward. Speak with one of our Gainesville attorneys today.