How to File a Claim Against a Construction Contractor's Bond

Contacting the Surety Company

Identify the surety company that wrote the bond. Typically the name and contact information of the surety company that wrote a construction contractor's bond will be listed with your state licensing board. Typically you can find this information on the licensing board's website, but you may need to make a phone call to the licensing board office. You'll need the contractor's license number or the correct legal name under which the contractor is licensed to access this information. You should be able to determine the name and basic contact information for the surety company that wrote the bond, as well as the dates through which it is effective.

Confirm the contractor was covered. You should be able to find information about the dates the particular surety company covered the contractor. The project the contractor worked on for you must be within those dates. Compare the dates the project occurred to the date listed for the bond. The project must start and end within the effective dates of the bond. You also may be able to get ahold of a copy of the bond itself. This won't be available from the licensing board, though – you'll have to get it from the contractor or from the surety company itself. Keep in mind that you might run into conflict asking the contractor for a copy of their own bond. Instead, ask the person above them – the person to whom the bond runs. If they're a subcontractor, you want to talk to a general contractor. If they're the general contractor, you should talk to the property owner or the project manager.

Gather information. You'll need to provide the surety company with a detailed description of your claim, including dates, times, and locations where necessary. You also may need supporting documentation or photographic evidence. Most surety companies will want, at a minimum, a copy of the contract you signed with the construction contractor for whom they wrote the bond. If you are a subcontractor and your claim is based on nonpayment, you may need to provide cancelled checks or bank statements to show which payments were made. If your claim is based on nonperformance, on the other hand, you should include proof in the form of photos or correspondence between you and the contractor.

Submit your claim. The method of filing a claim against a construction contractor's bond will vary according to your state law as well as the policies and procedures of each individual surety company. You may be able to find this information online, or you may have to call. Don't address your claim to the surety company representative who wrote the bond. That person typically will be a member of the sales department, and have nothing to do with claims. You need to search for the surety company's claims department and address your form there. Just call the general number for the surety company and ask where you should send a claim. If the surety company doesn't have a form to complete, you'll have to write a letter and send it to the claims department. Make sure the claim includes your name and contact information, the name and contact information for the construction contractor, and a detailed description of the incident that gave rise to your claim.

Wait for a response. Once your claim is received, the surety company will investigate your claim and send you a response, typically within a few weeks. The type of remedy offered will depend on the reason for your claim and the contractor's response to your claim. The surety typically will conduct an investigation of the claim to determine its options. This may include communicating with the construction contractor. Generally, the surety will not take action without getting input from the construction contractor. The contractor should be aware of the claim against the bond, and in most cases they are given an opportunity to correct the problem on their own before the surety company takes action. If the contractor owes you money and won't pay, the surety company may write you a check for the total. The contractor will then owe the money to the surety. In cases of nonperformance, the surety company may provide another contractor to complete the work as set forth in the original contract.

Complaining to the Licensing Board

Find your state's licensing board. Each state has a licensing agency or board that is responsible for licensing construction contractors. You can search for the board online to find a website that provides information about the state board and the location of a field office near you. Once on the website, locate the complaint information page. You'll find information about the types of complaints you can file and the process for doing so. Keep in mind that not all issues you have with a contractor will be licensing violations. Licensing complaints may only be appropriate for particular types of performance or payment disputes. You'll also find out what the deadlines are for filing a complaint. Typically there will be a deadline of a few months or a year from the date the incident took place that is the subject matter of the complaint. Filing a complaint does not mean that the licensing board will file a claim against the contractor's bond on your behalf. You'll have to do that yourself. You may file your claim against the contractor's bond at the same time, or before, you file your complaint to the licensing board.

Fill out a complaint form. The licensing board will have a complaint form you must complete that details information about you, the contractor, and the subject matter of the complaint. You may be able to download this form from the licensing board's website, or you may need to visit the local licensing office. Your complaint form must include your name and contact information, as well as the name and contact information of the construction contractor. If you've already filed a claim against the contractor's bond, you should state this somewhere on your complaint to the licensing board. The licensing board may want to contact or work in tandem with the surety company. As with the surety claim, the complaint must provide a detailed description of the incident that gave rise to your complaint. However, your goal may be different depending on the particular licensing violation committed. A default on the responsibilities of a construction contract usually constitutes a licensing violation as well. However, this is not always the case. If you're unsure whether the incident constitutes a licensing violation, you may want to call and speak to someone who works at the licensing board.

Submit your complaint form. Once you've completed your complaint form and signed it, you'll need to send it in to your local licensing board office along with any supporting documents. In some locations, you may be able to fill out and submit the form online. However, you'll still need to mail copies of supporting documents such as the contract. At a minimum, you'll need to include a copy of the construction contract. Other documents may be necessary to support the facts you set forth in your description. You may want to send to the licensing board the same information and documentation that you sent to the surety company.

Cooperate with any investigation. Once your complaint is received by the licensing board, it typically will be assigned to an agent who will contact the contractor and investigate your complaint. The agent also may contact you for more information. After speaking to the contractor, the agent may contact you and ask additional questions regarding the incident you described in your complaint. If your complaint deals with nonperformance of the contract, the agent may want to visit the construction site to better understand what was and wasn't done.

Attempt mediation or arbitration. Most licensing boards use some form of alternate dispute resolution to resolve complaints filed with them. The form of dispute resolution recommended or required varies greatly among states. Mediation is voluntary, meaning both you and the contractor must agree to participate. During mediation, a neutral third-party will attempt to negotiate a resolution to the problem between you and the contractor. Arbitration may be voluntary or mandatory. However, even if you engage in voluntary arbitration, you typically have no choice over the outcome once you agree to the process. In arbitration, a neutral arbitrator (typically a judge or retired construction law attorney) hears from both sides, similar to a courtroom hearing, and then makes a decision which is binding on all parties. If you are unable to reach a decision through mediation or arbitration with the licensing board, and you are dissatisfied with the response of the surety company to your claim, you may have to file a lawsuit to resolve your problem.

Going to Small Claims Court

Locate the correct court. Typically you'll want to use the small claims court in the county where the project took place. Check the court's website or call the court's clerk to find out what the claim limits are in your area. Small claims courts only provide monetary damages up to a certain amount. This limit varies from state to state. It may be as high as $10,000, but usually it's less. If the construction project isn't completed and you want to enforce the contract by having the contractor complete the work, small claims court won't work for you. This also is true if your damages are higher than the small claims limit. Small claims courts are designed so you can handle your claim yourself. However, you should consult an attorney if you're contemplating a lawsuit against a contractor and their surety company that must be filed in state court rather than small claims.

Fill out the necessary claim forms. Each small claims court has fill-in-the-blank forms for you to complete if you want to initiate a small claims case. Typically you'll have to go to the clerk's office to get copies of these forms. Some courts also have the forms available online. You can download them and either type your answers directly on the form or print them out and handwrite your answers. If the forms come with instructions, read them carefully before you start filling out the forms. The forms are typically fairly self-explanatory, asking information about yourself, the person you're suing, and the reason you're suing them. Remember that you can only sue in small claims court for money – not performance. If you want to get a court order for the contractor to complete a project, you'll have to use a regular state court.

File your claim. Once you've filled out your forms, make at least three copies of the forms themselves along with any supporting documentation such as the construction contract. Take both your original forms and your copies to the clerk's office. You'll have to pay a filing fee to the clerk, typically $100 or less. Courts do have fee waivers for indigent litigants, but these waivers may not be available for small claims cases. You may want to call the clerk's office ahead of time to find out the exact amount of the filing fee and what forms of payment are accepted. You also may be able to find out this information on the court's website. The clerk will stamp your originals and copies, and give the copies back to you. One copy is for your records. The other two copies are for the construction contractor and the surety company that wrote their bond.

Have the contractor and surety company served. After your claim is filed, you must have the form hand-delivered to both the contractor and the surety company so they have legal notice of the claim you've filed against them. You cannot serve the forms yourself. This must be done by someone over the age of 18 who has no involvement or interest in the case. Often people choose to pay a small fee to the sheriff's department to have a sheriff's deputy complete service. This way you know it's been done correctly. You'll need the name and address of the surety company's agent for service. You'll need the same information for the construction contractor if they have incorporated their business.

Receive any written response. When the contractor and the surety company receive the claim, they typically have a brief period of time to file a written answer. Unlike in state courts, written answers are optional in some small claims courts. If a written answer is required, you can expect it to be served on you in the same way you served your claim. Once you have all this information together, you may want to consult an attorney about your case. You typically aren't allowed to be represented by an attorney in small claims court, but they can provide you assistance in preparing for your hearing. The contractor or the surety company may have various defenses to your claims. If they provide a written answer, this can give you time to evaluate those defenses and determine what you can say in response. Spend the time before the hearing getting your paperwork together. You will need your copies of all the papers you filed with the court, as well as a copy of the contract and any other evidence, such as photographs, that you wish to show the judge.

Attend your hearing. On the date your hearing is scheduled, you must show up in small claims court if you want the judge to hear your claim. If you're late or fail to appear at the hearing, the court typically will dismiss your claim. Small claims courts hearings typically are less formal than regular courtroom hearings, but try to dress professionally and conservatively. Treat the judge and there court officers with respect. Depending on the size of the courthouse, you probably want to show up about a half hour early so you have time to go through security and find the right courtroom. The judge will be hearing several cases in one day, so take a seat in the gallery until your case is called. This gives you an opportunity to observe the procedure in other cases (unless, of course, you're called first). Move to the front of the courtroom when the judge calls your case. Since it's your claim, the judge will want to hear from you first. You may have to give a small summary of your claim, or the judge may ask you questions. After hearing from the contractor or surety company, the judge will make his or her ruling on your claim. Although the judge typically will make a decision from the bench, it may take a day or two for you to get the written order.