Common Question: Do I Have Lien Rights OR Payment Bond Rights?

There are many times where a subcontractor, sub-subcontractor, or supplier does not know whether they have construction lien rights or payment bond rights in the event they are not paid.  This means they are uncertain whether to preserve their nonpayment rights against the real property through recording a lien or against a payment bond surety.   This is an important question and best answered on the front end.

But, if you do not know, the first thing to do is ask if the project is a public project or private project.

If a public project, it is more likely than not that there will be a payment bond furnished by the general contractor.  Thus, parties downstream from the general contractor need to preserve their rights against the payment bond.

If the project is a private project, then pull up the Notice of Commencement (and see if there is any Amended Notice of Commencement) relating to the property.  If there is a payment bond, it should be identified in the Notice of Commencement with a copy of the payment bond being attached.   This information will tell you whether you need to preserve and perfect your rights against the real property or against the bond. (If a payment bond is not identified in the Notice of Commencement, then you have rights against the real property.)

Finally, if you have questions or concerns as to preserving and perfecting your rights, whether through recording and foreclosing on a construction lien or pursuing a claim against a payment bond, it is always best to consult and retain counsel.

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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