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Payment and Performance Bonds on Public Projects

Contractors, when looking to assert your lien rights against the general contractor or the owner, it’s important to understand whether this is a private project or a government funded project. Federally funded projects are subject to the Miller Act, while state or locally owned projects are subject to North Carolina’s local “Little Miller Act.” The requirements for government funded projects are different than for private construction jobs. The good thing for contractors is that performance and payment bonds are generally required by government projects. Performance bonds guarantee the principal faithful requirement of the contract requirements. Payment bonds guarantee payment to unpaid material suppliers, laborers, and certain subcontractors.

In North Carolina, the Little Miller Act sets forth that when the total amount of construction contracts for any one project exceeds $300,000, a performance and payment bond is required by the government agency from any contractor with a contract more than $50,000. The performance and payment bonds generally constitute 100% of the construction contract amount and the guarantor/surety cannot limit their own liability in that surety agreement. You have a right to receive a copy of this bond within 10 days of written request of the government agency.

Any claimant who has performed labor or furnished materials 90 days from last furnishing of labor or materials may bring an action on such payment bond in his own name to recover any amount due for such labor or materials. Any claimant who has a direct relationship with a subcontractor but no direct relationship with the contractor may bring an action so long as written notice given to the contractor within 120 days from the date of the final furnishing of materials.

The action must be brought in the county where the contract is to be or has been performed. No action may be commenced or 1 year from the day final settlement or labor last performed. Of course, if you are outside of one year, the claimant still has the ability to sue on a breach of contract claim. However, the surety who guaranteed the payment or performance bond would not be liable in that situation.

Contractors, to speak with a civil litigation attorney regarding your construction law issue, contact Maginnis Law, PLLC to speak with a construction lawyer regarding your Miller Act issue. Maginnis Law, PLLC is a Raleigh civil litigation firm handling cases in Wake Forest, Cary, Apex, Clayton and throughout the Triangle region. Contact Maginnis Law at 919.526.0450 or visit our website at to speak with a civil attorney regarding your case.