Tennessee Bond Claim: Requirements and Best Practices | Handle

Blog

Tennessee Bond Claim: Requirements and Best Practices

Tennessee Bond Claim: Requirements and Best Practices

June 10, 2020

Construction projects that are funded through public funds require a different set of procedures for recovering payment from non-paying clients. Instead of filing a mechanics lien – a remedy that applies only to private projects – construction participants working on public projects must make a payment bond claim.

Making a payment bond claim is relatively simple. In Tennessee, qualified construction parties can simply serve a Notice of Bond Claim if they want to receive the full payment that they worked hard to earn.

Send a Tennessee bond claim in 60 seconds

Send a Tennessee bond claim in 60 seconds

Send Online Today

This step-by-step guide explains the process for serving a Tennessee Notice of Bond Claim, from preparing the Notice of Bond Claim form all the way to the best practices to keep in mind to ensure compliance with all the bond claim requirements.

Who can serve a Tennessee Notice of Bond Claim?

First- and lower-tier subcontractors as well as material suppliers are allowed to make a payment bond claim in Tennessee in order to protect their payment rights when working on public projects. Other parties such as architects and engineers are also covered by Tennessee bond claim rights.

The only notable exception consists of suppliers to suppliers, who unfortunately have no bond claim rights in Tennessee.

File a bond claim today

When must you serve a Tennessee Notice of Bond Claim?

Parties can make a bond claim in Tennessee after their work on a project and within 90 days of project completion.

In other words, you should wait until you are finished furnishing labor or materials to a project before you serve a Tennessee Notice of Bond Claim. However, you only have 90 days after project completion to serve the bond claim. Note that project completion applies to the whole project and may not necessarily correspond to your last day of work.

When to serve a Tennessee Notice of Bond Claim

On which parties must you serve a Tennessee Notice of Bond Claim?

According to Tennessee Code Section 12-4-205, the Tennessee Notice of Bond Claim must be served on the general contractor who executed the bond or the public official in charge of awarding the contract.

You may serve the Tennessee bond claim on both parties to ensure that they are both aware of your payment claim.

If the public project is commissioned by a municipality, you may mail or deliver the Notice of Bond Claim to the mayor. The same applies when the project is funded through a county – mailing the Notice of Bond Claim to the county mayor is a valid way to serve your Tennessee Notice of Bond Claim.

How to serve a Notice of Bond Claim

How to serve a Notice of Bond Claim

1. Prepare the Tennessee Notice of Bond Claim form

The Tennessee code does not have a prescribed template for a public payment bond claim. However, the state law says that a Tennessee bond claim form must contain the following information:

  • a description of the nature of the services (e.g., labor or materials) furnished
  • an itemized account of the material supplied or job done
  • the balance due
  • a description of the property improved

Note that all the details above must be reflected in your Tennessee payment bond claim for the document to be considered valid.

2. Serve the Tennessee Notice of Bond Claim on the required parties

The step after preparing the Tennessee bond claim form is to serve it on the required parties. The parties who must receive the Tennessee bond claim is either the public official in charge of awarding the contract or the general contractor who executed the payment bond. Note that while serving on one of these parties is sufficient, serving the document on both of them is still preferable so they are both aware of your claim.

Also note that if you are working on a project funded through a municipality or a county, serving a copy on the mayor is also considered sufficient.

There are two valid methods for serving the Tennessee Notice of Bond Claim: by personal delivery or certified mail with return receipt requested. If you are serving the bond claim by personal delivery, ask the recipient to sign an acknowledgment of receipt. If you are serving via certified mail, make sure to keep copies of all relevant documents such as postal and return receipts.

Another thing to keep in mind is the deadline: in Tennessee, the Notice of Bond Claim must be served after your last day of work but within 90 days of project completion. Once a project is fully completed, you have only 90 days to serve the Notice of Bond Claim.

Remember that serving a Tennessee Notice of Bond Claim after the 90-day period will invalidate your claim. This means that even if you have a valid payment claim, you are no longer allowed to recover payment through the bond as you did not comply with Tennessee’s Notice of Bond Claim rules.

3. Enforce the Notice of Bond Claim if payment is not released

This third step will only be necessary if you do not receive your payment after serving a bond claim. Enforcing a Notice of Bond Claim means initiating a lawsuit to require the surety to honor their payment obligation and cover your payment.

There is a deadline for initiating this lawsuit: in Tennessee, the Notice of Bond Claim must be enforced either within 6 months of project completion or within 6 months of your last day of work. These two deadlines may not necessarily fall on the same date – the best practice is to initiate the lawsuit on whichever date is earlier.

Best practices when making a Tennessee Notice of Bond Claim

1. Organize your invoices to make itemizing your services easier

The Tennessee Notice of Bond Claim form must include an itemized account of the services that you furnished to the property. This account breaks down the labor and material that you furnished to the project and indicates the corresponding amount for those services. You can complete this part of the form easily if your invoices are organized, so it is best practice to make all your paperwork orderly.

2. Serve the Tennessee Notice of Bond Claim on both the public official in charge and the general contractor

While serving the Tennessee Notice of Bond Claim on one of the parties will be considered sufficient, it is still best practice to deliver your bond claim form on both the general contractor and the public official in charge of awarding the contract. Serving your bond claim on both parties will open communication lines among relevant stakeholders, which can help speed up the process for your payment claim.

3. Enforce the Notice of Bond Claim before the earlier deadline

The two deadlines for serving the Tennessee Notice of Bond Claim are within 6 months of your last day of work or within 6 months of the full project completion. The law does not specify which is the applicable deadline if the two dates are not the same, so it is best practice to pick the earlier date. Make sure that you serve your Tennessee Notice of Bond Claim before the earlier deadline to avoid potential issues.

 Further reading