In the construction industry, there are two ways that contractors can ensure owners will pay in full for the labor and materials they’ve provided for the project. These two options are known as bond claims and mechanic’s liens.
What to Know About a Bond Claim
A bond claim, also known as a surety bond, is a financial promise that the principal will finish their obligations to the obligee. In most cases, when it comes to bond claims, it’s regarding the prime contractor securing a bond with their subcontractors. The contractor is the obligee and the subcontractor is the principal, the one responsible for fulfilling all their obligations. The bond claim is a guarantee for the contractor that they will not get stuck with an incomplete project to turn back over to the property owner.
What to Know About a Mechanic’s Lien
As Orlando construction lawyers, we know mechanic’s liens are commonly called construction liens, and they are a security interest that the contractor gains in a property. The mechanic’s lien will be held until the contractor is able to receive full compensation for their work or services. If the contractor does not receive the correct compensation, the lien holder has the ability to keep the property listed in the lien.
Which Should You File?
With all of the liens and claims in the construction industry, it can be hard to determine what you should file when you need help. We recommend you seek the guidance of your Orlando construction attorney, but we can provide a brief overview of these two choices. A contractor needs to know if the construction project they are working on is public or private. When it comes to public projects that are funded by a government agency, we recommend a bond (surety) claim because the government has no intention of risking losing ownership of their property. For private property projects, we typically see mechanic’s liens being used. However, in some cases private projects need to be bonded instead.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.