State (or Local) Payment Bond Claim

Liens do not apply to public projects. Instead of lien rights, you get payment bond claim rights.

When a payment bond required

• A state or local public entity that enters a contract for a public work where the contract price exceeds $150,000 must require the contractor before beginning work under the contract to furnish the public entity a payment bond.
  • If the contract price is $150,000 or less, the public entity may require the contractor to furnish any other form of guarantee approved by the public entity. 
• Before relying on the existence of a payment bond or other form of guarantee for payment, you should make certain they are available.
  • Unlike in Utah, for example, there is no failure to obtain payment bond claim in Wyoming.

Contact me for help determining whether a payment bond or other form of guarantee is available.

Persons entitled to make claim 

• Any person performing any work or labor or furnishing any material or goods of any kind which were used in the execution of the prime contract, conditioned for the performance and completion of the prime contract according to its terms, compliance with all the requirements of law and payment as due of all just claims for work or labor performed and materials furnished in the execution of the prime contract may make a claim against the payment bond or other form of guarantee.
• Unlike under the Miller Act, there is no “remoteness” limitation for Wyoming state and local payment bond claims.

Contact me to determine if you entitled to make a payment bond claim.

Preliminary Notice

• Subcontractors and materialmen must send a Preliminary Notice to the general contractor no later than sixty (60) days after the date on which they first furnished services or materials if:
  • the general contractor’s contract (i.e., the prime contract) for the project exceeds $150,000, and
  • the general contractor posts on the construction site a prominent sign citing the pertinent statute and stating that any subcontractor or materialman shall give notice to the general contractor of a right to protection under the bond or guarantee and that failure to provide the notice shall waive the subcontractor or materialman’s protection under the bond or guarantee.
• The Preliminary Notice must state that it is a notice of a right to protection under the bond or guarantee. It must be signed by the subcontractor or materialman and must include the following information:
  • The subcontractor or materialman’s name, address and phone number and the name of a contact person;
  • The name and address of the subcontractor’s or materialman’s vendor; and
  • The type or description of the materials or services provided.
• Failure to send a Preliminary Notice when required (see above) waives the subcontractor or materialman’s protection under the payment bond or other guarantee.
  • If there is any question about whether a Preliminary Notice is required, I would recommend sending one. There is no harm to sending a Preliminary Notice, and it may get you paid.
• Here is a Preliminary Notice form that I prepared.

Contact me for help with your Preliminary Notice?

Enforcement

• An action (i.e., a lawsuit) against a payment bond or other form of guaranty must be commenced within one (1) year after “final completion” of the project.
  • When does “final completion” occur? The public entity owner is required to post the date of final completion for project on the state procurement website or its entity’s official website.

Contact me for help determining the date of “final completion” and to file an action (i.e., a lawsuit) to enforce your payment rights?

Other considerations and topics for discussion

Payment bonds are a great tool for collecting money. But they are complex. I have provided you with the basic steps necessary to preserve your rights so that we can use a payment bond as a tool to collect your money. But there is much more you will want to take into account that is beyond the scope of our current discussion. For example:

• How do you determine if there is a payment bond or other form of guarantee? 
• What if there is no payment bond or other guarantee for the project?
• What if you determine that the payment bond is defective?
• What if there is not enough money in the payment bond to cover your claim?

Questions?