The Difference Between Public and Private Projects

When it comes to filing mechanics liens and collecting money owed to your company, there is a world of difference between private and public construction projects.   And it’s very important to know the difference between the two.

Why Does It Matter?

Before explaining what distinguishes these projects from one another, let me talk a little about why it matters.

If unpaid on a private project, the laws in most states allow you to file a “mechanics lien” against the property.   This gives your company an actual interest in the real estate your labor or materials improved.   The lien must be filed within a particular period of time, and if the lien is not paid, you’re required to “foreclose” upon the lien to obtain payment, which could result in the property being sold at auction to obtain the funds to payoff your claim.

If unpaid on a public project, there is a much different experience.

Generally, your company is not able to file a “mechanics lien” against a public project because most states (and the federal government) prohibit any party from gaining an interest in public property.   As a result, most public construction projects may only proceed if a “payment bond” is issued.    In the event of non-payment on a public job, rather than file a lien the unpaid party will file a “claim” against the bond.   Instead of foreclosing on the property, the claimant will “foreclose” – so to speak – against the lien, eventually resulting in payment.

What is the Difference Between Public and Private Projects?

Easy.

99 times out of a 100, a project is private when owned by a private person or entity, and is public when owned by the government.

When the government is the United States or a federal agency, the applicable rules are found within the “Miller Act.”   We’ve written a good deal about Miller Act rules and claims here at the Construction Lien Blog.    When the government is the state or a state agency, the applicable rules are usually found within a “Little Miller Act” statute.    These vary state-by-state, a great resource on little miller acts across the country is linked below (and here).

Be very careful when performing work on a private school (i.e. private university) or for a non-profit agency, and even large public corporations.   We sometimes think of these types of organizations as “public” agencies, but that does not necessarily render them a “public construction project.”    Usually, such a designation is reserved for land and projects owned by the federal or state government.    If you’re unsure, it’s a good idea to ask, or to hire an attorney to research the question.

GREAT Resources for Public Lien Laws and Public Contracting Issues

Here are two great resources for folks looking to learn a little more about public contracting in general, and about bond / lien claims against public projects.

1)  Mike Purdy’s Public Contracting Blog:  Mike Purdy is a retired public contracting consultant out of Seattle, WA.  His frequently updated blog addresses public contracting questions and laws across the country.

2)  Law Office of David Bransdorfer Miller Act Summaries:   This website, offered by a New York law firm, provides summaries of the Miller Act, and each state’s version of the Miller Act.  It’s a great place to start researching the applicable public contracting claim / lien laws in your state.

Scott Wolfe Publishes Avvo Legal Guide on Miller Act Claims

Seattle based attorney and member of Wolfe Law Group, Scott Wolfe, published a Legal Guide this week on AVVO.com, a lawyer rating service.

What is a Miller Act Claim?

How do you file a Miller Act Claim?

Am I entitled to file a Miller Act Claim?

These are some of the questions answered by Scott Wolfe’s latest Legal Guide published on Avvo.com, titled “How To File A Miller Act Claim.” In the guide, Scott breaks the federal filing down into four steps, introducing the topic as follows:

If you furnished labor and/or materials to a federal construction project, and were not paid, contractors or suppliers may file a “Miller Act Claim” against the general contractor’s payment bond. You can file a claim on your own, through a filing service, or with an experienced attorney.

Click here to read all of Scott’s Legal Guides at Avvo.com.

Chart Explaining Miller Act Claim Rights and Deadlines

We spend so much time talking about Mechanic Liens here at the Construction Lien Blog we sometimes overlook the equivalent tool available to contractors and suppliers on federal projects – claims under the Miller Act.    Of course, we have (see here).   And of course, Express Lien is experienced in preparing and filing Miller Act Claims for contractors and suppliers across the country.

The good news about the Miller Act’s requirements is that they are the same across the country.   As such, contractors on federal projects need only be familiar with one set of rules.   The bad news, however, is that the requirements are often misstated.

To make things easy, we created this chart.

Don’t Know Who Bonded A State Or Federal Project? Just ask.

In nearly every circumstance, a general contractor on a federal or state project is required to maintain a bond for the work being performed.   These bonds protect the payment rights of subcontractors, sub-subcontractors and suppliers.    In the event any of these parties are not paid on the project, the unpaid party can typically file a claim against the surety who bonds the project as per the Miller Act or a state’s Little Miller Act.  (Read this great article from Construction Business Owner about bonds, generally).

Claims against sureties are beneficial because:  (1) It can reduce the prevalence of personality conflicts between the unpaid party and the general contractor; and (2) It is a guarantee that at the end of a proceeding, money will be there.

However, you can’t make a claim against a surety if you don’t know who the surety is.   And if you’re not on the best of a terms with a general contractor, you may fear that it won’t reveal the surety to you.

So, this begs the question:  how on earth do you discover the identity of a surety?

The answer is quite simple:  Just ask.  That’s right, just ask for it.

Who To Ask?

Under the Miller Act and most Little Miller Act statutes, the public agency in charge of the project is required to (and quite used to) disclose the identity of the surety to anyone who asks for it.

Using Google, you can generally always find the governing authority.   A governing authority will typically manage its contracts through:

(a) public works department;
(b) new construction department;
(c) purchasing department;
(d) capital projects department; or
(e) facilities department

Most of these governing authorities (almost all) will have a website that gives you some information about their public contracts.   Figuring out which department is in charge of the contract is generally a toss up, so you will likely need to navigate around government websites to find the best possible contact.

How to Ask

As I stated above, agencies are required to disclose the surety on the job….actually getting it, just depends on how difficult the agency will make it for you.

If a governing authority has a website, you will generally be able to find out at least a little bit of information about their projects. If the project is relatively new, they might still have bid postings, pictures, articles and reports posted.

Giving the agency a phone call will usually do the trick, but if you run into trouble, just send a certified letter making the request.  You can even have Express Lien send this notice / request for you.   We’ll even figure out who to contact, saving your company valuable time and energy.

Got a Public Contract?: Be Sure to Preserve Your Rights to Payment

Over the past two years, the construction industry has seen a boom in public works. This is due to lower construction costs, influx of federal stimulus funds and lower financing rates for local governments.

The result has meant tons of public work for contractors, who benefit both from Davis-Bacon wages and bonded work, which virtually ensures payment!

Express Lien has taken the time to ensure that its clients know the basics of filing and preserving lien rights on the public job. A recent article describes your rights under the Miller Act, a federal series of laws which govern contracts for construction over the amount of $100,000.00.

But, did you also know that each state has what is called a “Little Miller Act.” These collections of laws mirror the purpose and structure of the Miller Act, namely providing rules for payment, security and claims on the public project.

For instance, did you know that every state or locally managed construction contract issued in Louisiana for a total of no less than $100,000.00, requires a performance and payment bond and demands that you file a sworn statement of your unpaid claim within 45 days of completion? (See La. R.S. 38:2241, et seq.) We’ve have reported on this before.

How about the great state of Washington (our home), which requires that a contractor provide 60 day notice of its right to a lien against a public contract’s retainage? (RCW 60.28, et seq.) Failing to timely file could result in forfeiture to timely payment, and your right to proceed in an action against the contractor’s bond.

Its important that contractors understand that it takes more than simple contractual compliance to ensure payment. Having a qualified lien management company on hand makes it all that much easier to feel secured on the jobsite!

Express Lien’s $395 flat fee services includes tracking down and obtaining copies of the prime contractor’s bond, noticing the surety and prime contractor, and filing with the appropriate state or federal agency, your claim. Remember that our services also include all mailing and delivery confirmation.

Also, remember that in many cases, suppliers, second-tier subcontractors, and equipment lessors, may be required to issue preliminary notices of the materials they sell or lease, or the work that they will perform on a public project. Express Lien’s $35 flat fee notices can save you!

Using Express Lien’s Lien Pilot, you could greatly benefit from tracking deadlines and lien obligations. Please be sure to check out Lien Pilot and keep up with ConstructionLienBlog.com, for more information on how to protect your business.

5 Things To Know About The Miller Act

When unpaid on a private construction project, an unpaid contractor or supplier can typically file a mechanics lien against the project itself.    The lien attaches directly to the property, preventing transfers and sales, and protecting the unpaid contractor’s right to payment.

On jobs when the federal government owns the property itself, there is no legal right to lien it.   Instead, unpaid contractors or suppliers must turn to 40 U.S.C. § 3131; commonly referred to as The Miller Act.

Under the Miller Act, before any contract of more than $100,000 is awarded on a federal building or work, the prime contractor must post a bond to protect those supplying labor and/or materials to the project.  The bond is always there to protect qualifying subcontractors and suppliers from non-payment.

Here are five things you should know about the Miller Act:

• Prime Contractors: If you are the prime contractor, you cannot bring a claim under the Miller Act.   Instead, you have a contract claim against the government, and must bring a lawsuit against it.   The Miller Act deadlines are not applicable, and you should consult with an attorney to discuss your claim.

• First Tier Subcontractors and Material Suppliers: If you contracted with the prime contractor to provide labor and/or materials, you can sue the surety on the Miller Act Bond.   Suit must be brought within 1 year from the last date you provided materials or services.   A Miller Act Notice may be provided to the Owner and/or Surety.

• Second Tier Subcontractors and Material Suppliers to First Tier Subcontractors: If you contracted with a first tier subcontractor, within 90 days from the last furnishing of labor and/or materials, you must deliver a Miller Act Notice to the prime contractor.   The law has specific requirements for what must be contained in the notice, and how it must be sent.   You need not deliver it to the surety, but it may be a good idea.   Suit on the bond must be brought within 1 year from the last date you provided materials and/or services.

• Third Tier Subcontractors and Suppliers to Suppliers:   If you contracted with a second tier subcontractor, or if you are a supplier to a supplier, you do not have any rights under the Miller Act.  Instead, you must simply seek payment from the party they contracted with.

• If you aren’t paid on a project, you have a right to see the bond and the contract.   Send an affidavit to to the contracting agency confirming that you both supplied labor and/or materials to the project, and have not been paid.

How Express Lien Can Help

• Unsure if your project qualifies as a Miller Act Project?
• Confused about how to actually deliver the notice?
• Not sure who is the contracting agency for your federal project?

Express Lien is experienced in preparing and delivering Miller Act Notices on behalf of unpaid contractors and/or suppliers to qualifying federal projects.   We can research your project, find the relevant parties, and help protect your right to files suit on the Miller Act.

Express Lien charges $395.00 to research the project, prepare the Miller Act Notice, deliver it according to statute, prepare a proof of delivery, and maintain all the required documents for you in our industry-leading Lien Pilot.

If you’re interested in simply getting a copy of the bond and the contract, Express Lien will prepare and send the required request to the contracting agency for just $95.00.

Get Started Now!