Bond Claims In Texas: Need To Know

Trust and reliability are everything in the world of construction. But what happens when that trust is shaken—when payments are delayed or projects don’t go as smoothly as planned? For contractors, subcontractors, and suppliers in Texas, bond claims can become the safety net no one wants to think about but everyone needs. While you hope to never have to deal with one, understanding how bond claims work is essential to protecting your business and keeping projects moving forward.

Let’s dive into the often-overlooked side of construction: the bond claim process in Texas. It might not be the most glamorous part of the job, but it’s the kind of knowledge that can save you time, money, and headaches when things go sideways.

What Is a Bond Claim?

A bond claim is a legal action that provides financial protection to parties involved in construction projects, ensuring that contractual obligations are met, whether it be for the performance of work or payment for materials and labor. In Texas, bond claims serve as a safety net, especially in large public works and private construction projects where contracts can sometimes fall through.

A bond claim arises when a party—such as a contractor, subcontractor, or supplier—has not been paid or when the obligations of a contract have not been fulfilled. The claimant can seek compensation through a surety bond that was issued for the project. Surety bonds, which are typically required by law in public works and large private projects, provide assurance that if something goes wrong, compensation is available to cover losses or non-payment. This makes bond claims a critical part of the construction industry.

Three primary types of bonds play a role in construction projects:

Performance Bonds: A performance bond guarantees that a contractor will complete a project according to the terms of the contract. If the contractor fails to meet these obligations, the bond can be used to ensure the project is completed, even if a new contractor must be brought in. This is particularly important for public projects, as the government needs assurance that taxpayer-funded projects will be finished on time and to standard.

Payment Bonds: Payment bonds ensure that all parties providing labor, services, or materials for a construction project are paid. This protects subcontractors, laborers, and suppliers from non-payment, even if the general contractor defaults. Texas law mandates payment bonds for certain types of public projects, ensuring that those who contribute to the work are financially protected.

Bid Bonds: Bid bonds act as a guarantee that contractors will honor their bid proposals if selected for a project. It ensures that if a contractor is awarded the bid, they will enter into the contract and provide the necessary performance and payment bonds. Without a bid bond, there would be little assurance that contractors would follow through after being awarded a contract.

In Texas, the law requires these bonds for public works projects under the Texas Government Code, Chapter 2253, ensuring that taxpayers are protected from financial losses and that contractors, subcontractors, and suppliers are paid fairly. Private projects may also use bonds to create additional protection. According to the Texas Department of Insurance, any subcontractor, material supplier, or laborer who has provided services for a bonded project can file a bond claim if they have not been paid or if the project is not completed as agreed.

Legal Requirements for Bond Claims in Texas

Texas has stringent laws governing bond claims, particularly in public works projects, as outlined in the Texas Government Code, Chapter 2253. This law ensures that subcontractors, suppliers, and laborers can seek payment if they are not compensated by the general contractor.

Key timelines are critical—subcontractors and suppliers must file their claims within 90 days of completing work or delivering materials, as specified in Section 2253.041. Prime contractors have up to a year to file their claims. Missing these deadlines can result in a denied claim.

Supporting documentation is essential to a successful claim. Invoices, contracts, and delivery receipts are needed to prove that labor or materials were provided. Written notice to both the contractor and surety company is also required to initiate the claim, per Section 2253.047. Failure to follow these legal requirements can lead to claim dismissal, penalties, or court costs. Staying compliant ensures the validity of your bond claim and helps avoid legal disputes.

Filing a Bond Claim in Texas

Filing a bond claim in Texas requires careful adherence to the process outlined in Texas Government Code, Chapter 2253. Start by gathering all necessary documentation, such as contracts, invoices, and delivery receipts, to support your claim. Proper documentation is critical, as highlighted in Section 2253.047, to prove the validity of your claim.

Once you have the documentation, promptly notify all involved parties, including the general contractor and surety company. Section 2253.041 requires notice to be filed within 90 days of the last work or material delivery. Missing this deadline can invalidate your claim, so timeliness is crucial.

Submit the claim to the surety company, ensuring all paperwork is complete. Common challenges include incomplete documentation or disputes over the claim. To resolve disputes, maintain clear communication, and consult legal counsel if necessary.

MPP Legal Can Help with Your Bond Claim

With years of experience in construction law and bond disputes, we have a deep understanding of the complexities involved in these cases. Whether you are a contractor seeking payment or a project owner defending against an unfair claim, we’re here to guide you through the process.

Our legal team offers comprehensive services, including legal counsel and representation for both claimants and defendants. We understand the intricacies of Texas bond laws and are skilled at building strong cases, ensuring that all legal requirements are met and that deadlines are strictly followed. We take care of everything—from gathering the necessary documentation to negotiating with surety companies—so you don’t have to navigate the complexities alone.

Our experience in construction law allows us to approach each case with a tailored strategy. We know that no two bond disputes are the same, and our goal is to provide effective solutions that resolve disputes efficiently and protect your interests. If you’re facing a bond claim or dispute in Texas, let us help. Contact MPP Legal today for expert guidance and representation in your bond claim case. We’re here to make sure your rights are protected every step of the way.

Conclusion

Bond claims are an essential part of construction projects in Texas, providing a legal framework to ensure work gets done and payments are made. Understanding the bond claim process, including the legal requirements and steps to file or defend a claim, is crucial for contractors, subcontractors, suppliers, and project owners.

At MPP Legal, we are committed to helping you navigate the complexities of bond claims in Texas. With our expertise in construction law and bond disputes, you can trust us to handle your case with care and precision. Contact us today to learn how we can assist you with your bond claim issues.

Bond Claims In Texas: What You Need To Know

Recent Posts

Archives

Categories

Popular Tags