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Subcontractor Recovery Against Surety on Payment Bond


Subcontractors on public projects and some private projects may be able to look past the general contractor, first tier sub-contractor, or even the developer who fails to make required payments under their construction contract.  When the general contractor claims to not have the assets to make these payments, subcontractors can look to the party with more funds to get paid.  Contact the civil litigation construction attorneys at Maginnis Howard at (919) 526-0450 or visit our contact page to submit a new case inquiry here.

Subcontractors have the ability to sue a surety and the general contractor as an intended third-party beneficiary on a breach of the surety bond contract, even if they had no direct contract with the surety.  This right exists so long as the payment bond covers payments to suppliers of materials and labor, as nearly all payment bonds will.  North Carolina courts look favorably towards sub-contractors in addressing bonds.  Payment bonds are construed to protect subcontractors who engage in public construction projects.

Payment and performance bonds are required in North Carolina public construction projects but also occasionally exist in large-scale private construction projects.  Large developers may require payments bonds to be issued by the general contractor in order to avoid potential disputes down the line with unpaid subcontractors.

If you are a sub-contractor that has not been paid on a public project or a large-scale private project, you may be able to look to other parties to recover. It’s also important to note that your lien rights are different in public projects vs.  private projects.  Contact Maginnis Law, PLLC at 919.526.0450 to learn more.  Maginnis Law is a Raleigh civil litigation firm with construction lawyers handling matters in Cary, Apex, Wake Forest, Durham, Morrisville and the rest of the Triangle area.  Please contact the firm to schedule a free initial consultation or submit a new case inquiry here.