Construction Lien & Payment Bonds

Construction Liens and Payment Bonds are the two protections in the construction
industry for enforcing payment on a project. Marty A. Burnstein is expert at both.

Construction Lien

Contractors, subcontractors and suppliers need to protect their right to payment by knowing how to use their powerful remedy called a construction lien.

The remedy of a construction lien applies to all private work construction, including service and remodeling. A lien is enforced by foreclosure that can result in the owner’s land being sold to pay off the lien of a contractor, subcontractor and supplier. The lien claimant may also recover its reasonable attorney fees above and beyond its contract balance.

Knowing how to use this payment remedy is critical in good times as well as bad, and especially if your customer files bankruptcy or becomes uncollectible.

Smart property owners need to protect themselves against the recording of liens. An owner’s land can be sold to pay off a valid lien claim even if the owner already paid the contractor and even though the owner had no contract with the subcontractor or supplier.

By recording a notice of commencement at the start of construction and requiring sworn statements and lien waiver, an owner can often prevent a lien from being recorded and in many cases, negate the validity of any lien that is filed.

“Marty does an outstanding job for Davis Iron Works. If we want to fix the problem ourselves, he offers advice. But if we need him to step in, he takes care of business.

“Marty is an expert at construction lien law.”

Frank Nehr Jr.
Executive VP, Davis Iron Works

Payment Bonds

Subcontractors and suppliers do not have lien rights on governmental work projects such as public schools, colleges, cities, townships and counties, as well as state and federal construction jobs.

However, they do have the right to pursue payment against the contractor’s payment bond furnished to the public owner. The payment bond is provided by the contractor and its surety to provide an additional payment remedy for unpaid subs and suppliers.

Knowing how to make a timely and proper claim against the payment bond is essential for subcontractors and suppliers who work in the public sector. Unlike liens where substantial compliance may be sufficient, strict and technical compliance is the legal standard.

Protecting your right to payment on public construction projects is just as important as using the lien remedy on private construction.

“I’ve known Marty for over 20 years, and he is the best in the business. He reviews our contracts for subs, trade and suppliers. After his review, I know they are right.

“Marty is knowledgeable, fair, and reasonably priced.”

Michael Caroll
CFO, George W. Auch Company