Construction bonds (also known as surety bonds) are frequently used in Oklahoma as means of protecting parties in a construction contract. A party seeking a bond must supply financial and other information related to experience and reputation to the bond underwriter.
Examples of how construction bonds are used:
- Owner requires contractor to provide a performance bond on a project. Owner is assured that the project will be completed by the contractor (or another contractor if the original contractor defaults)
- School district requires contractor to provide payment bond. If subcontractors on the project are not paid by the contractor, they may attach the bond.
- General contractor requires subcontractor to provide payment bond on a project, ensuring that all sub-subcontractors are paid.
If you seek payment on a construction bond, then you will file a Bond Claim Notice. Please note that frequently this Notice must be delivered within a certain time after the work was completed.
After receiving a Bond Claim Notice, the bond company will require you to complete a “Proof of Claim Affidavit.” The bond company is required to thoroughly investigate your claim. If a party disputes your right to payment under the bond, the matter is frequently moved to arbitration since so many construction contracts have arbitration clauses.
* Gary Quinnett presentation on “Liens and Bonds” (click here)