When a project involves real property owned by the State or one of its sub-divisions (i.e., County, City or political sub-division thereof, §255.05, Fla. Stat., mandates a payment and performance bond.  Obviously, the performance aspects of the bond is for the benefit of the public owner and the payment portion is for the benefit of the subcontractors, sub-subcontractor and suppliers as there are no lien rights against public property.  The bond is conditioned upon the Contractor promptly making payments to all persons defined in §713.01 Fla. Stat., who furnish labor, services or materials for the prosecution of that work.  From this you can see that those persons or entities that are entitled to assert payment claims under the public works bond are the same as those under Chapter 713, Fla. Stat., dealing with private property.  A claimant wishing to perfect a claim under the bond who is not in contractual privity with the general contractor must serve a notice of intent to look to the bond for payment within forty-five (45) days after commencing to furnish labor, services or materials.  This form notice is often combined with the Notice to Owner used for private property. 

Any lawsuit to enforce a claim under the bond must be brought within one (1) year of last providing labor, services or materials by a particular subcontractor and does not run from the completion of the project, final acceptance by the owner or other event.

On private projects, the bond having the most similarity to the 255.05 public works bond is set out in §713.23, Fla. Stat. which is an unconditional payment bond.
 “Unconditional” means that the surety is liable to pay lienors even if the owner does not pay the general contractor.   Many lienors are unaware that while a pay-when-paid clause may provide the contractor with a defense to paying a lien claimant when the contractor has not received payment from the owner, that defense is not available to the surety.  In other words, the surety remains liable to pay the claim even though there is a pay-when-paid clause and the contractor has not received payment from the owner.  Furthermore, an unconditional bond under §713.23 exempts the owner’s property from liens and it is therefore improper to file a lien on the Owner’s property when there is a 713.23 bond.

Like the 255.05 bond, an action to enforce a claim under an unconditional bond must be brought within one (1) year of last furnishing labor, services and materials. 

Next is a “conditional” payment bond under §713.245, Fla. Stat.  This bond is distinguishable from the unconditional bond in that the surety becomes liable to make payment under the bond only when the contractor has received payment from the Owner.  In other words, the pay-when-paid clause in the general contractor’s agreement is also applicable to the surety’s obligation to pay claims under the bond.  Unlike the 713.23 unconditional bond, you must still timely serve your Notice to Owner and record your Claim of Lien.

Both the “conditional” and “unconditional” bonds are required to be identified in and recorded in the public records along with the Notice of Commencement.  A conditional bond will have bold type at the top identifying it as a conditional bond.

The last type of bond to be discussed in this article is what is commonly referred to as a “transfer bond”. The transfer bond is a good thing.  Even though there might not be a conditional bond or an unconditional bond, the owner may still clear his property of liens by filling a transfer bond.  The bond is obtained  by  the owner depositing with the County Clerk a sum of money or filing on the Clerks’ office a bond executed by the surety in an amount equal to the claim of lien plus the three (3) years of interest, plus twenty-five (25%) percent of the amount demanded in the claim of lien.   Once the owner does this, the County Clerk will make a certificate showing that the lien has been transferred from the real property to the bond or security and will mail a copy of that certificate to the person named in the lien.  At this point there is either cash or a bond available to satisfy the lien.