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Bond Claim Notices

 

Arizona

  1. Basics of an AZ Payment Bond (Public & Private Works).
  2. AZ Notice Requirements (Public & Private Works).
  3. Enforcing an AZ Payment Bond (Public & Private Works).

Basics of an AZ Payment Bond
A surety bond is comprised of a surety company (the “surety”) that guarantees to one party (the “obligee”) that a second party (the “principal”) will perform its obligation otherwise the surety will step in to honor the obligation. Under an Arizona Little Miller Act Payment Bond, the general/prime contractor (the “principal”) purchases a surety bond to assure the property owner/public entity (the “obligee”) that payment will be made to the lower tier contractors and suppliers (the beneficiaries of the payment bond). If payment is not made, the surety and principal are liable for redering payment. The payment bond is very useful if the general/prime contractor or the person who hired you goes bankrupt.

The Arizona payment bond laws are often referred to as the “Little Miller Act” because it resembles the federal payment bond laws which are referred to as the “Miller Act.” On most Arizona public work projects, the general/prime contractor must post a payment bond to ensure that certain lower tier contractors and material suppliers are paid. Under Arizona’s Little Miller Act, not all contractors and material suppliers are covered. The parties that are covered by Arizona’s Little Miller Act payment bond are limited to the following:
  • Material suppliers and laborers under contract with the prime contractor
  • Subcontractors to the prime contractor; and
  • Sub-subcontractors, material suppliers, and laborers under contract with the subcontractor
Other lower tier contractors such as “sub-sub-subcontractors” and a “material supplier to another material supplier” are generally not covered under Arizona’s Little Miller Act payment bond and cannot file a claim. If you do not fall under the protected parties, contact your attorney as there may be special exceptions available.

OPTIONAL PAYMENT BOND FOR PRIVATE WORK PROJECTS: Although not required, a payment bond may be posted and recorded by a general/prime contractor on a private works project. Payment bonds are rarely used for private projects because of the unnecessary additional costs.

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