BOND CLAIM Written notice to the payment bond surety from a subcontractor, supplier or materialman, advising that the claimant has not been paid, and which perfects the claimant’s right to sue on the bond.
BONDING-OFF LIEN This refers to the filing of a surety bond as security in place of the property or contract funds against which the Lien initially attaches. After a proper bond is filed, the Lien is considered “discharged”; it will no longer act as a cloud on the title to the property nor will it continue to hold up further project payments. However, the Lien is still enforceable against the contractor and the bond, and it may be foreclosed on by the lienor.
COMPLETION AND ACCEPTANCE Date when project is substantially completed, such that it may be occupied for its intended use, and accepted by the owner as complete in accordance with the contract.
DIRECT LIEN A mechanics Lien which is enforceable against the owners real property, even if the owner has paid the contractor in full. It must be noted that all statutory notice and filing requirements must be strictly adhered to. Certain states may offer owners other defenses to double liability; this must be examined on a case-by-case basis.
ET SEQ The abbreviation for the Latin phrase et sequentes meaning “and the following.” It is commonly used by lawyers to include numbered lists, pages or sections after the first number is stated.
FEDERAL PROJECT Construction, alteration or repair of any public building or public work of the United States.
FINAL SETTLEMENT Payment by the owner of the remaining contract balance as adjusted by change orders.
FIRST FURNISHING Date when labor or materials are first provided or delivered to the project.
GENERAL CONTRACTOR One who contracts directly with the owner for construction of an improvement. Also referred to as principal contractor, prime contractor, or original contractor.
INTENT TO LIEN Notice to the owner that a mechanics Lien is about to be filed against their property.
LAST FURNISHING Date when labor or materials are last provided or delivered to the project.
LIEN ON FUNDS A Lien enforceable against unpaid project funds in the hands of the public entity which contracted for the construction project.
LIMITED LIEN A Lien enforceable against the owner’s real property to the extent of the unpaid balance of contract funds due from the owner to the general contractor at the time notice of the Lien is given. This Lien may also be limited by the balance of funds due from the general contractor to the subcontractor.
MATERIALMAN One who furnishes only materials for the improvement under the contract with the owner, and who performs no labor in their installation. Also referred to as material supplier.
MECHANICS LIEN A right enforceable against the owner’s real property improved by the labor and materials furnished under the construction contract, to secure payment. Also referred to as construction lien, materialmans lien, affidavit of lien, or notice of lien.
MILLER ACT Federal statute requiring contractors to post payment bonds on federal projects.
NO-LIEN CONTRACT Contract between the owner and general contractor which waives the right to file mechanics liens against the project.
NOTICE OF COMMENCEMENT Document required to be recorded by the owner at the commencement of construction, listing basic project information.
NOTICE OF COMPLETION Document required to be recorded by the owner at completion of construction.
NOTICE OF INTENT Notice to the owner that a mechanics Lien is about to be filed against the project.
PAY-WHEN-PAID CLAUSE Provision in contract between prime contractor and subcontractor or materialman which states that the general contractor is not obligated to pay subcontractor or materialman until it receives payment from owner. Shifts risk of owner=s non-payment from general contractor to subcontractor or materialman.
PAYMENT BOND Contractors bond whereby a surety guarantees to the owner that providers of materials and labor will be paid. Claimants are those who contract with the contractor or a subcontractor.
PRELIMINARY NOTICE Notice given to the owner and general contractor by subcontractors and material suppliers, advising they are contributing to the project. This notice is usually a pre-requisite to preserving Lien and/or bond rights. Also referred to as notice of furnishing, notice to owner, or notice to contractor. This Notice is generally required by state statute. However, providing a non-statutory Notice in states where it is not required is very useful to notify parties you are on the job and expect to be paid.
PRIVATE PROJECT Construction, alteration or repair of a privately owned building or other improvement.
PROMPT-PAYMENT LAW Statute which requires contractors and subcontractors who receive payment for work on a construction project to make payment to their subcontractors and vendors within a specified time, and imposing penalties for failure to do so.
PUBLIC PROJECT Construction, alteration or repair of any public building or public work of a state or any of its subdivisions.
SPECIALLY-FABRICATED MATERIALS Materials manufactured according to project specifications, such as to have no substantial value for any other purpose.
STOP NOTICE Notice given to the project owner requiring them to withhold an amount sufficient to pay the claimant’s balance from unpaid contract funds.
SUBCONTRACTOR One who contracts directly with the general contractor to provide materials and labor.
TRUST-FUND THEORY As provided by various state statutes, money paid by the project owner to the contractor, or by the contractor to a subcontractor, is held in trust for payment of lower-tier providers.