Payment bond
A payment bond is a surety bond in which a surety company guarantees that the contractor will pay the subcontractors, laborers and suppliers on a project. If the contractor doesn't, they can claim against the bond instead.
Updated November 9, 2026 · 1 min read
On this page
Why it matters
On public projects you generally can't put a mechanics lien on government property, so the bond takes the lien's place. It's usually issued alongside a performance bond, which protects the owner rather than the subs.
The Miller Act
- When: 40 U.S.C. § 3131 requires performance and payment bonds on federal construction contracts above a threshold. The statute says more than $100,000; the FAR, which adjusts it, currently sets $150,000. Contracts over $35,000 up to that amount need a payment bond or another approved payment protection.
- How much: the payment bond equals the total contract amount unless the contracting officer finds that impractical, and it can't be less than the performance bond.
- Claims: under § 3133, a sub or supplier still unpaid 90 days after its last work may sue on the bond. A second-tier sub or supplier, with no contract with the prime, must first give the prime written notice within those 90 days. Suit must be filed within a year of the last work.
States have their own versions for state and local public works, often called Little Miller Acts, with different thresholds and deadlines.
An example
A supplier sells conduit to an electrical sub on a federal courthouse job and last delivers on May 1. Unpaid, it must notify the prime contractor in writing by July 30 and sue, if it comes to that, by May 1 the next year.
SignMaster's conditional and unconditional lien waiver templates release payment bond rights along with lien rights, for the amount paid.
General information, not legal advice
Bond claim deadlines are strict and differ between federal and state jobs. Confirm yours early.