Payment Bonds

A payment bond is a guarantee that a contractor will pay all subcontractors, suppliers, and laborers according to contract, which is critical for jobs on public property where mechanic's liens cannot be used. If there is a claim on the bond due to nonpayment or other contractual breech, the wronged party files a claim against the bond. If the claim is valid, the surety will compensate the wronged party and the contractor will be responsible for repayment to the surety.

Payment bond requirements are set in place by the Miller Act, and are often issued in conjunction with performance bonds, many times on the same form. Many contractors choose to purchase them when negotiating a contract.

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