Performance Bond Claims Lawyers in Miami, Florida
Say you’re a property owner in Florida who wishes to build an office complex on your land. You commission an architect to design the project, and then you search for a general contractor to oversee construction. A lot is at stake.
The project is going to cost $2.5 million. Do you really trust the contractor to come in on time with the desired results? What do you do to protect your investment?
This is where something called a performance bond comes into the picture. You as the property owner can require the general contractor to obtain a performance bond. The performance bond, underwritten by a financial institution, will guarantee that the work will be done as specified on time or you, the owner, will be compensated.
That makes it sound fairly straightforward, but if the contractor does run into difficulties or goes broke, the performance bond issuer has several options: stepping in to provide oversight, contracting with another builder, paying the property owner, or a combination of approaches.
The original contractor who purchased the bond will be on the hook to pay back the bond issuer.
If you’re in the middle of a construction project as a property owner in or around Miami, Florida, and suddenly work seems to be stalled or problems have set in that threaten completion, you may well need to make a claim on the performance bond to protect your interests, financial and otherwise. If you need help in filing the claim and getting the project back on track, contact the performance bond claims attorneys at Miguel A. Brizuela, P.A.
We are experienced in all aspects of construction law at the federal, state, and local levels. We will review your situation and provide you with a path going forward to help resolve your dilemma and see your project through to completion, or be compensated for your losses.
In addition to the Miami area, we serve clients throughout Southern Florida, including Fort Lauderdale and West Palm Beach.
Skilled Advocacy & Solid Representation
Performance Bonds in Florida
The U.S. Miller Act requires contractors on all federally-funded projects valued at $100,000 or more to acquire performance bonds, as well as payment bonds. Performance bonds protect the owner – in this case, the U.S. government – while payment bonds protect the subcontractors and others who are hired by the general contractor. The payment bond ensures that these people will get paid, just like the performance bond ensures the owner will be compensated if the project isn’t completed.
Florida has what is called a Little Miller Act, requiring contractors on state projects valued at $100,000 or more to acquire performance and payment bonds. Private sector owners also rely on performance bonds as protection against their projects, although there is no legal requirement to do so. It is simply a smart business practice.
There are three entities involved in a performance bond:
THE OWNER OR OBLIGEE: This is the person or entity that contracts for a construction project with a general contractor.
THE GENERAL CONTRACTOR OR PRINCIPAL: The person or entity who must purchase the performance bond.
THE BOND ISSUER OR SURETY: This is the financial institution that issues and underwrites the performance bond.
Typically, the owner will require a performance bond, and the contractor will thus have to purchase one. Say the project is $250,000. The surety might require $2,500 to purchase the bond, but the principal is on the hook for the full amount if something goes wrong and the surety must pay out a claim or finance the completion of the project.
What Happens if the Contractor Defaults
On the surface, it may appear that a performance bond is like a life insurance policy, which pays out upon the insured’s death. In other words, if the project faces difficulties and can’t be completed, the performance bond issuer will simply write a check to the obligee, or owner, and then dun the contractor for the money. In practice, however, it’s not always that straightforward.
First off, the surety might deny the claim. They could cite the fact that the notice of default was not submitted in a timely fashion. Each bond sets forth requirements for making a claim, and if these requirements are not fully met, the issuer can deny the claim.
What will often happen upon receiving a claim is that the surety will first launch an investigation to see what’s really going on. The issuer may then pursue one of four routes:
PAY THE OBLIGEE: The surety will pay the full amount of the bond or the amount needed to complete the project, whichever is lower.
FINANCE THE PROJECT: If the project is close to completion, the surety may provide financing for the contractor to complete the work.
MAKE AN ARRANGEMENT: The surety will confer with the owner to set a path forward. The owner may then find a contractor to take over, and the surety will pay the added costs.
TAKE OVER THE PROJECT: The surety can step in, find a new contractor, and complete the project.
Performance Bond Claims Attorneys Serving Miami, Florida
If you have a performance bond claim anywhere in Southern Florida, contact us immediately at Miguel A. Brizuela, P.A. to help you navigate the system. We are experienced in all aspects of construction law and can assist you in seeing your project through to a timely conclusion or obtaining the compensation you deserve under terms of the performance bond.