A Lienor is Still Required to Perfect Its Lien Rights with a Conditional Payment Bond

A conditional payment bond is a type of payment bond that a general contractor can procure for a private construction project.  A conditional payment bond is less common than an unconditional payment bond because a conditional payment bond operates to transfer a construction lien to the security of the bond to the extent of the owner’s payment to the general contractor for the lienor’s work.  Thus, the lienor is still required to properly perfect its lien rights.

If the owner paid the general contractor for the lienor’s work, there is a statutory procedure to transfer the lien to the conditional payment bond.

If the owner did not pay the general contractor for the lienor’s work, then the construction lien is not transferred to the conditional payment bond.

And, if the owner partially paid the general contractor for the lienor’s work, then there is a statutory procedure to transfer the portion of the lien the owner already paid the general contractor for to the conditional payment bond and the balance remains a lien against the owner’s property.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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