13.3 Florida Public Payment Bonds & Florida Little Miller Act

13.3 Florida Public Payment Bonds & Florida Little Miller Act

Public Project Security: Public real property generally cannot be encumbered by Chapter 713 construction liens. When F.S. § 255.05 requires a recorded payment bond, covered downstream claimants look to the contractor and surety under the statute. Whether a claimant also has a direct written-contract claim depends on privity and the agreement; do not describe every public-project remedy as exclusively a bond claim.

When working on public projects in Florida, contractors operate under a completely distinct statutory framework from private construction liens. Understanding the nuances of the Florida Little Miller Act is essential for passing the Florida Construction Business and Finance Exam.

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1. The Florida Little Miller Act (F.S. § 255.05)

The federal Miller Act (40 U.S.C. § 3131 et seq.) requires payment and performance bonds on federal projects. Florida adopted its own state counterpart, widely known as the Florida Little Miller Act, codified at Florida Statutes § 255.05.

Sovereign Immunity & Prohibition of Public Liens

Under the constitutional doctrine of sovereign immunity, government-owned real property cannot be subjected to judicial foreclosure, encumbrance, or sheriff's sale. If a school board, county government, municipal utility, or state university fails to ensure that contractors pay their downstream trades, subcontractors cannot record a Claim of Lien against the civic building, road, or infrastructure.

To prevent downstream subcontractors and materialmen from suffering catastrophic uncompensated losses, F.S. § 255.05 requires the prime contractor to furnish a statutory surety bond that guarantees both performance of the work and payment of all downstream labor and materials.

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2. Statutory Contract Thresholds

F.S. § 255.05 does not use one identical exemption rule for every public owner:

• State work at $100,000 or less: No payment and performance bond is required.
• State work above $100,000 but below $200,000: The Secretary of Management Services may delegate to a state agency authority to grant an exemption.
• County, city, political-subdivision, or public-authority work at $200,000 or less: The awarding official or board may exempt the contractor in its discretion.
• Larger contracts: The statutory bond requirement generally applies, subject to any specific exception written into the statute.
• Narrow 2026 exception: F.S. § 255.05(1)(h) permits a discretionary exemption for specified work on property in an area of critical state concern under a qualifying 99-year-or-longer Habitat for Humanity ground lease, while preserving stated lien treatment for the leasehold.

A contractor should therefore identify both the public owner and the contract amount. Calling every contract below $100,000 “exempt” or every $100,000–$200,000 contract “discretionary” obscures the separate state and local rules.

Dual Nature of Public Bonds

1. Performance Bond: Protects the public entity (the obligee) by guaranteeing that the prime contractor (the principal) will complete the project according to plans, specifications, and contract terms. If the contractor defaults, the surety must step in, complete the project, or finance completion.
2. Payment Bond: Protects downstream claimants (subcontractors, sub-subcontractors, and material suppliers) by guaranteeing that the contractor will pay for all labor, services, and materials furnished to the project.

Before commencing work on a bonded public project, the contractor must record the payment and performance bond in the public records of the county where the improvement is located.

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3. Claimant Protection Protocol Under F.S. § 255.05

Because public claimants cannot file liens, they must follow a strict three-step statutory procedure to recover against the statutory payment bond.

Step 1: Notice to Contractor (45-Day Rule)

Under F.S. § 255.05(2)(a)2:

• Who Must Serve: Any claimant who is not in direct contractual privity with the prime contractor (e.g., sub-subcontractors and materialmen supplying subcontractors).
• Timing: Must serve written notice on the prime contractor within 45 calendar days after beginning to furnish labor, materials, or supplies.
• Exemptions: Claimants in direct privity with the prime contractor and site laborers are exempt from serving this initial notice.

Step 2: Notice of Nonpayment (90-Day Rule)

Under F.S. § 255.05(2)(a)2, if an account remains unpaid, the claimant must serve a formal Notice of Nonpayment:

• Parties Served: Must be served on both the prime contractor and the surety company.
• Timing Window: Can be served no earlier than 45 days after first furnishing labor or materials, but must be served no later than 90 calendar days after the date of final furnishing of labor, services, or materials by the claimant.
• Statutory Form: The notice must be executed under oath, specify the nature of labor and materials furnished, state the amounts paid and unpaid, identify the public project, and list the dates of first and final furnishing.

Step 3: Lawsuit on the Bond (1-Year Statute of Limitations)

Under F.S. § 255.05(10), any civil action against the prime contractor or the surety on the payment bond must be filed in court:

Strictly within 1 year from the date of final furnishing of labor, services, or materials by the claimant.

Crucial Exam Distinction: Private Liens vs. Public Bond Claims

Florida exam questions frequently test the difference between limitation clocks:

• On private construction liens under F.S. § 713.22, the 1-year statute of limitations runs from the date the Claim of Lien was recorded in the public records.
• On public payment bond claims under F.S. § 255.05, the 1-year statute of limitations runs from the date of final furnishing of labor, services, or materials by the claimant. The date of recording the bond or serving notices is irrelevant to the lawsuit clock.

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4. Private Statutory Payment Bonds (F.S. § 713.23 & § 713.245)

Payment bonds are not limited to public projects. Private owners frequently utilize statutory payment bonds to insulate their real property from mechanics' liens.

Unconditional Payment Bonds (F.S. § 713.23)

Under Florida Statutes § 713.23, a private property owner can completely exempt real estate from construction liens by requiring the general contractor to furnish an unconditional statutory payment bond:

• Bond Amount: Must equal at least the total prime contract price.
• Recording Requirement: A copy of the bond must be attached to and recorded with the Notice of Commencement in the county public records.
• Effect: When an unconditional § 713.23 bond is recorded, downstream subcontractors, sub-subcontractors, and materialmen are prohibited from recording construction liens against the owner's property. Their sole legal recourse is against the contractor and surety on the bond.
• Notice Procedures: Mirror F.S. § 255.05: non-privity claimants must serve a Notice to Contractor within 45 days of first furnishing, serve a Notice of Nonpayment on contractor and surety within 90 days of final furnishing, and file suit within 1 year of final furnishing.

Conditional Payment Bonds (F.S. § 713.245)

A Conditional Payment Bond ties the surety's payment obligation directly to the prime contractor's receipt of payment from the owner ("pay-when-paid" protection for the surety):

• Statutory Form Requirements: The bond must be listed in and recorded with the notice of commencement before the project starts, its front-page title must contain “conditional payment bond,” and its front page must reproduce the statutory warning in at least 10-point type.
• Subcontractor Protection: If the owner fails to pay the prime contractor, the surety is not obligated to pay the subcontractor under the bond. However, the subcontractor retains the legal right to record a Claim of Lien against the owner's real property within 90 days of final furnishing.
• Recording a lien does not automatically transfer it. The property remains subject to preserved liens. For amounts the contractor has been paid, the owner or contractor may use the certificate-and-notice process in F.S. § 713.245; depending on the contractor's joinder, failure to contest, or notice of contest, the lien transfers to the bond only to the stated extent, and any excess remains on the property.