The Notice of Contest Against Payment Bond

I have talked about recording a Notice of Contest of Lien to shorten the lienor’s stature of limitations to foreclose on the construction lien from one year to sixty days.

This same principle applies to a statutory payment bond claims too (e.g., bonds provided by a general contractor) irrespective of whether the payment bond is provided on a private project or public project.

For example, on a private project, if a contractor receives a notice of nonpayment from a claimant looking to perfects its bond rights, the contractor can record a Notice of Contest Against Payment Bond (per Florida Statute s. 713.23) to shorten the claimant’s statute of limitations to sue on the payment bond to sixty  days.

On a public project, where certain claimants are not required to serve a notice of nonpayment if they are in privity of contract with the general contractor, the general contractor can still record a Notice of Contest Against Payment Bond (per Florida Statute  s . 255.05) if the claimant is no longer furnishing labor, materials, or services on the project.

In addition to recording the Notice of Contest Against Payment Bond, the contractor or contractor’s attorney needs to certify in the Notice that a copy of it is being served on the claimant in the address included in the notice of nonpayment.

Notably, on public projects, as mentioned above, the notice of nonpayment is required if the claimant is not in privity with the general contractor.  Therefore, you would want to slightly tweak the notice and serve it on a potential claimant in privity with the contractor in the notice included in the subcontract. However, this is seldom utilized absent receipt of a notice of nonpayment since it is premised on the contractor’s receipt of that formal notice of nonpayment as a means for a claimant to perfect their bond rights.

A copy of the Notice of Contest Against Payment Bond that would be recorded and served is set forth below:

NOTICE OF CONTEST OF CLAIM
AGAINST PAYMENT BOND

To: (Name and address of lienor)
You are notified that the undersigned contests your notice of nonpayment, dated ____ and served on the undersigned on ____ and that the time within which you may file suit to enforce your claim is limited to 60 days from the date of service of this notice.
DATED on _____

Signed: (Contractor or Attorney)

*Remember to add certification that the Notice has been served.

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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