Suppliers and subcontractors will file notices and claims even on the most credit-worthy accounts. We know that.
When we receive those notices, we may be obligated to respond and open a claim file, whether or not we know that you are a viable contractor. In general, we acknowledge the claims and begin the process of reviewing a claim or requesting additional information soon after any claim or notice is received. If you know that a claim is coming to us, you can save both of us considerable time by letting us know, letting us know if there is a problem, and letting us know when and how the claim will be dealt with. We may use this information in our initial response with the claimant.
If a claimant sends a notice to us, however informal, or gives us a call, we may open a claim file and log in the occurrence. We will notify you that we have been contacted. The claim may remain open until we have received verification that the matter has been resolved. We need confirmation from the claimant that they have been paid or their claim has otherwise been resolved. This may take the form of your sending us a copy of a release you have obtained in the normal course of payment, or a letter from the claimant withdrawing the claim. Please help us with the follow through to obtain this type of confirmation. An open claim may hold up a bid bond or tie up your bond line, so it is important to clear these quickly. Click here for a simple confirmation that your claim has been paid. If you need help with a partial, interim, or other special release, please let us know.
We understand that some suppliers are going to file notices no matter how quickly you pay your bills.
We know that some subcontractors and suppliers will contact us in an effort to pressure you to pay something that you might dispute. We understand those situations. We can be far more effective on your behalf if you have forewarned us of a disputed claim and provided us with the factual basis on which you dispute the claim.
Every week, we come across an account who tells us "not to worry" about the supplier who is complaining that the account's subcontractor has failed to pay them. We are often told, "Don't worry. I got a 'bills paid affidavit' from the sub." That piece of paper does not release that supplier's claims. The bonds you and we provide to owners and general contractors often create liability to remote tiers of suppliers and subcontractors. You may be obligated to pay a supplier who has filed a timely notice even if you have already paid your subcontractor. If you do not want to have to pay twice for the same services, you should establish procedures to obtain interim and final releases from your subcontractors' suppliers and sub-sub contractors.
Another answer we often receive is "I haven't been paid yet. They don't get paid until we do." In some cases, you do have enforceable pay-when-paid provisions in your subcontracts and purchase orders. In some cases, you do not have a written contract that requires the vendor to wait and you must rely on verbal agreements or custom and practice in the industry. We are not requiring you to pay anyone faster than industry practice and your agreements provide, but we do encourage you to protect yourself by obtaining pay-when-pay terms in your major purchase orders and subcontracts. If you have an understanding with a material salesman or equipment lessor that they will not be paid until you are paid, confirm that understanding in writing.
Do not be afraid to talk with our claims personnel. We can be a resource to you in dealing with payment bond claims.