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Bond Claims: Everything You Need to Know
How do you get paid on a public construction project when liens aren’t an option?
If you’re a subcontractor or supplier, a bond claim is the main way to recover what you’re owed.
Learn how bond claims work on public projects, who can file, important deadlines, and the common mistakes to avoid.
What Is a Bond Claim?
A bond claim is a formal demand for payment made against a surety bond issued for a construction project.
It protects the people who supply labour, materials, and services when a contractor fails to meet its contractual obligations.
A Payment Tool for Public Projects Where Liens Aren’t Allowed
Lien rights don’t apply to a public construction project. You can’t lien government-owned land or buildings to satisfy a debt.
Instead, general contractors of public projects are required by law to post a payment bond as a financial guarantee.
If the contractor fails to pay their financial obligations, the claimants look to the bond rather than the property.
Claims Are Filed Against a Surety-Issued Payment Bond
A surety bond guarantees that the general contractor (or prime contractor) will pay subcontractors, suppliers, and others who contribute to the construction project
It is a contract between three parties:
- Principal: The contractor who must obtain the bond and pay the premium.
- Obligee: The property or project owner that requires the bond; usually a government agency.
- Surety: The company that issues the bond and guarantees payment if the principal defaults (the guarantor).
If a valid claim is made, the surety pays the claimant. However, recovery is capped at the bond’s penal sum, the maximum amount the surety is obligated to pay.
Who Can File?
Eligibility depends on the project type, the bond form, and applicable laws.
Subcontractors, Suppliers, Lessors, and Laborers May Qualify
The following parties can file bond claims:
- Subcontractors
- Material suppliers
- Equipment lessors
- Laborers
The right to file is generally clear for anyone who has a contract directly with the general contractor (tier 1) or a subcontractor (tier 2).
Once you get further down the chain (tier 3 and beyond), it gets less straightforward. Whether you qualify depends on the terms of the bond and the local laws that apply.
Some lower-tier parties may still qualify, but they’re usually subject to extra notice requirements.
Federal and Provincial Laws Govern Eligibility
Eligibility rules depend on:
- Whether the project is federal, provincial, or municipal
- The wording in the terms of the bond
- The governing statute or regulations
- Whether the claimant contracted directly with the bonded contractor
Deadlines and Notices
Bond claims are extremely strict on due dates and limitation periods. Courts enforce very specific timelines for notice and response set out in the bond document. In other words, you can’t miss deadlines, as there’s no grace period.
Strict Timing Rules Apply Based on Last Work Performed
Generally, a claimant must give written notice to both the contractor and the surety within 120 days from the date they last provided materials or services.
Additionally, any legal action on the bond must be started within one year of the prime contractor finishing their work, including any repairs done under a guarantee.
These timelines are strict.
Errors in Timing or Service Can Void Claims
Notice requirements are also strict. Bond claims often fail because of the following mistakes:
- Sending notice too early or too late
- Serving the wrong party
- Using regular mail instead of certified mail
- Failing to include a sworn statement when required
Bond Claim Process
While details vary by project and bond, the process is generally simple.
Confirm the Bond and Gather Required Documents
Before filing anything, confirm:
- That a payment bond exists
- The bond number and surety company
- The project owner
- The general contractor or prime contractor
You have a right to request a copy of the payment bond from the project owner or the prime contractor. To be safe, ask for it as soon as the contract is awarded.
You’ll need the following documentation:
- The contract or purchase order
- Invoices and payment records
- Proof of furnishing labour or materials
- Delivery tickets, timesheets, or rental logs
- Copy of the labour and material payment bond
Serve Notices and File the Claim Properly
Next comes formal notice.
Your notice should be in writing and should include:
- The claimant’s legal name and contact information
- The project name and location
- The name of the principal contractor
- A clear statement that you are making a claim under the payment bond
- The amount being claimed
- The date you last furnished labour, materials, or services
Some bond forms also require a sworn statement, which must be commissioned or notarized.
Be sure to serve the notice to the surety and contractor at their business addresses via registered mail. Keep the receipt as proof of delivery.
Take Legal Action If Payment Remains Unpaid
If the claim is valid and you still haven’t been paid, you can pursue legal action against the bond, which means suing the surety company.
Keep in mind, you have one year from the last furnishing date to file this lawsuit.
Common Mistakes
Below are common mistakes you should avoid when making a bond claim:
Wrong Parties, Missed Deadlines, or Poor Documentation
Frequent issues include:
- Naming the wrong contractor or project owner
- Failing to identify the correct surety company
- Missing notice deadlines
- Incomplete or inconsistent records
- Relying on verbal assurances instead of formal notice
Important: If your documentation doesn’t match the original contract, the surety may deny the claim based on “insufficient proof.”
Minor Errors Can Result in Denial
Unlike lien claims, bond claims leave very little room for error. Because the surety could be responsible for a huge payout, they scrutinize every detail of a claim.
A wrong date, a missing document, an incorrect service method, or an unsigned sworn statement can be enough grounds for rejection.
These mistakes might feel small, but sureties can and often do use them as reasons to deny a claim, even when you’re clearly owed the money.
Getting legal advice before you send notices or file a claim ensures you meet all formal requirements, saving you time, money, and unnecessary headaches.
Protect Your Payment Rights
Bond claims are powerful, but only when handled correctly. Understanding notice requirements, deadlines, and proper documentation can prevent costly mistakes.
If you’re dealing with non-payment on a bonded construction project in British Columbia, legal advice can help you:
- Confirm eligibility
- Meet deadlines
- Navigate disputes with the contractor or surety
- Enforce your rights efficiently
Contact Harbourview Law to Recover What You’re Owed
Harbourview Law focuses on construction and commercial litigation and represents contractors, subcontractors, suppliers, and businesses across BC.
If you’re owed money on a public project or facing issues with a payment bond, contact us today to discuss your situation and how we can help.
Bond Claims
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