Public projects are different from private projects in that they don’t have any mechanic’s lien protection for contractors. The courts have historically concluded that a municipality (County, City, State, agency, etc.) should not be burdened with payment disputes that arise from a construction project. The courts also have determined that public buildings should not be exposed to the risk of foreclosure.
So in place of mechanics’ lien claims, the Texas government enacted the McGregor Act which can be found in the Texas Government Code, which required the general contractor on any Texas Governmental project over $25,000, to furnish a payment bond for the protection of the other subcontractors who perform labor or provide supplies on the project. This Act stemmed from the Federal Government’s enactment of the Miller Act, which controls federal projects. The requirements for each are substantially similar. Payment bonds are not required, but are sometimes used, on private projects when owners seek to avoid the expense and delay of payment disputes.
- are the claimants entitled to exercise the remedy;
- notice and perfection of requirements;
- the priority or waiver of such remedies;
- the labor and materials that can be included in such claims;
- enforcement requirements;
- the limit of the payment bond obligation;
- the duration and scope of the bond obligation
KMDA’s attorneys are skilled in handling the review of the client’s claim to determine whether or not it qualifies for a bond claim, the perfection of such claim, negotiation with the bond company, and filing suit to enforce the bond, if necessary.