Lien Law Online eLert for 11/19/2009 - Maine

November 19, 2009

The contributing author on the Maine chapter of Lienlaw Online has made some minor changes and added additional, timely, information regarding Bond Claims on State Owned Projects. For convenience, the added information regarding Bond Claims is reprinted below:

Bond Claims on State Owned Projects

Projects involving “the construction, alteration or repair of any public building or other public improvement or public work, including highways” are covered by the Maine Public Works Surety Bond Law.[23] This law applies to any contracts exceeding $125,000 for the construction, alteration or repair of a public building. Maine’s mechanic’s lien law does not cover projects on state owned property; the unpaid subcontractor or supplier’s recourse is on a payment bond issued on the project.

The Surety Bond statute requires that the bond provided on a public project contain certain minimum requirements. Specifically, the bond has to protect those who have a direct contract with the general contractor and also those who have a direct contract with a subcontractor of the general contractor.[24] In other words, the payment bond provides coverage for two tiers: subcontractors and sub-subcontractors.

At the discretion of the state, Maine also allows an irrevocable reasonable letter of credit to be posted in lieu of a payment bond. The statute contains specific requirements for the financial institution issuing the letter of credit, including the fact that the institution must be federally insured and have a bond rating of A3 by Moody’s or A− by Standard and Poor.[25]

A supplier (or subcontractor) to a subcontractor of the general contractor has specific notification requirements which must be followed. Those without a direct contract with the general contractor must provide written notice to the general contractor within 90 days of the date on which the last labor or material was furnished and suits on all bond claims must be filed within one year.[26] The notice must state the amount claimed and the name of the party to whom the material was furnished or labor supplied. This notice needs to be sent by registered or certified mail, postage pre-paid, with an envelope addressed to the contractor any place the contractor maintains a residence or conducts business. Failure to comply with the requirement of notice by registered or certified mail may not invalidate a bond claim as long as the general contractor has received actual written notice of the claim. [27]

All changes have been uploaded on the website for immediate review.

John A. Hobson, Esquire (Contributing Author)

Perkins Thompson, P.A.