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Mitchell Law Office, LLC |
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Contractor Bond Claims |
Overview In both Oregon and Washington, one of the requirements to become a licensed contractor is to provide a surety bond. The purpose of the surety bond is to provide a secure fund from which claimants can receive payment. In order to reach those funds, you need to make a claim against the bond. What is the surety bond? A surety bond is NOT an insurance policy. In an insurance contract, the insurance company pays the insured party in the event something "bad" happens to the insured party. A good example is automobile insurance. As a condition of being given a license, all contractors must carry a Commercial General Liability insurance policy. If the contractor's ladder falls onto a homeowner's valuable vase, the insurance policy would pay the damages to the vase. By contrast, with a surety contract, the surety agrees to perform certain obligations in the event the principal conractor is unable to perform the obligations. An example is a performance surety bond, where the surety actually has the work performed if the principal is unable to do so. A contractor's license surety bond is for the purpose of paying claims if the contractor is unable to pay them. How can I make claims against a contractor's surety bond? The procedure to make a claim against a contractor's surety bond is different in Oregon and Washington. In Washington, a claimant must file a lawsuit against the contractor and must join the correct surety company as a party in that lawsuit. In general, that means you need an attorney to access a contractor's surety bond in Washington. By contrast, Oregon law makes it fairly easy to make claims against a contractor's surety bond. See the CCB Complaints Summary Chart. What are the deadlines to make a claim against a contractor's surety bond? In Washington, the controlling law is RCW Chapter 18.27, which generally provides that a claimant must file a lawsuit that names both the contractor and its surety (as shown on the Labor & Industries website [hyperlink to https://fortress.wa.gov/lni/bbip/]). Since claims generally must be brought within one year, you need to make certain that you file the lawsuit in a timely manner and that you name the correct surety. In Oregon, the controlling law is ORS 701.143. Under that law, your deadline depends on your status in regard to the contractor. See the CCB Complaints Summary Chart for an outline of the various claim deadlines. (In 2007, Oregon changed its terminology from "claims" to "complaints.") |