Payment Bond
A surety guarantees subs and suppliers get paid on the project.
What it means
A payment bond is a surety bond guaranteeing that subcontractors and suppliers on a project will be paid for their work and materials. If the bonded contractor fails to pay, an unpaid claimant can make a claim against the bond. Payment bonds are standard on public projects — where mechanics liens are generally unavailable against government property — and appear on many private jobs too. Claim deadlines and notice steps vary by state.
Why it matters before you sign
On a bonded job, the bond may be your real payment security — find out early whether one exists, get a copy, and calendar the claim deadlines just as you would lien deadlines.
In a contract, it looks like this
Unable to lien the courthouse project, the unpaid drywall sub filed a claim against the GC's payment bond.
This definition is a general, educational explanation — not legal advice. XOsign provides AI-assisted document tools and does not provide legal advice; consider consulting a qualified attorney for guidance on your specific situation. Requirements vary by state.
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