Private Project Payment Bonds – Make Sure to Serve Initial Notice of Intent (Notice to Owner) on the Contractor if You are Not in Privity with the Contractor

If you are working on a private project as a subcontractor, sub-subcontractor, or supplier, make sure you pull up the notice of commencement to confirm whether you have construction lien or payment bond rights.  If there is a payment bond, make sure you properly preserve your payment bond rights. Specifically, if you are not in privity with the general contractor (e.g., sub-subcontractor or supplier), you need to initially serve a notice of intent to look to the contractor’s bond within 45 days of initial furnishing or, at a minimum, serve a notice to owner and copy the contractor per Florida Statute s. 713.23(1)(c) below:

Before beginning or within 45 days after beginning to furnish labor, materials, or supplies, a lienor who is not in privity with the contractor, except a laborer, shall serve the contractor with notice in writing that the lienor will look to the contractor’s bond for protection on the work. If a notice of commencement with the attached bond is not recorded before commencement of construction, the lienor not in privity with the contractor may, in the alternative, elect to serve the notice to the contractor up to 45 days after the date the lienor is served with a copy of the bond. A notice to owner pursuant to s. 713.06 that has been timely served on the contractor satisfies the requirements of this paragraph. However, the limitation period for commencement of an action on the payment bond as established in paragraph (e) may not be expanded. The notice may be in substantially the following form and may be combined with a notice to owner given under s. 713.06 and, if so, may be entitled “NOTICE TO OWNER/NOTICE TO CONTRACTOR”:

The key is that if you are NOT in privity with the general contractor (e.g., sub-subcontractor or supplier) to make sure you serve the general contractor with either the notice to owner or notice of intent to look to its bond. Not doing so can be fatal to your payment bond claim because you have failed to properly perfect your bond rights in accordance with the law. See Stratton of Florida, Inc. v. Cerasoli, 426 So.2d 59 (Fla. 2d DCA 1983) (sub-subcontractor that failed to serve notice to owner/contractor on general contractor was not able to sue on general contractor’s payment bond).

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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