Contractor's payment bond; no lien attaches

  1. Law
  2. US Virgin Islands Code
  3. Property
  4. Construction Liens
  5. Existence and Priority of Liens
  6. Contractor's payment bond; no lien attaches

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  • (a) No lien shall attach to the real estate in behalf of any claimant other than the prime contractor if the owner or the prime contractor, prior to commencing the improvement under the contract between the owner and prime contractor, procures from a surety company authorized to do business in the Virgin Islands a payment bond meeting the requirements of this section.

  • (b) Subject to subsection (c) the bond must obligate the surety company to pay all sums due to subcontractors and subsubcontractors for services and materials supplied to the prime contractor or to a subcontractor pursuant to the contract under which the lien would otherwise arise.

  • (c) The amount of the payment bond shall be not less than the following percentages of the total contract price payable to the prime contractor;

    • (1) 50 percent of the contract price up to $1,000,000;

    • (2) 40 percent of that portion of the contract price above $1,000,000 and up to $5,000,000; and

    • (3) 35 percent of that portion of the contract price above $5,000,000.

      • If the total amount payable by the terms of the owner's contract with the prime contractor is indefinite, the payment bond shall be in a sum which the owner and prime contractor in good faith believe is at least one-half of the amount which is or would have been due to the prime contractor if he performs, or would have performed, the contract according to its terms; Provided, subcontractors and subsubcontractors to whom the payment bond applies may file a notice of lien, but the lien shall be enforceable only against the real estate for an amount which is not covered by the bond. In addition to the requirements of section 264 of this title, the notice of lien under this subsection shall state that a notice of payment bond has been filed and shall give the reference location for the notice of payment bond.

  • (d) If a bond has been procured pursuant to this section, notice thereof shall be recorded under section 267 of this title.

  • (e) The person acquiring the bond shall furnish a true copy of any bond procured under this section at cost of reproduction thereof to any claimant on request, and, for refusal to furnish a copy without justifiable cause, shall be liable to the claimant for any damages caused by the refusal or failure.

  • (f) No claimant may recover under the surety bonds provided in this section unless he

    • (1) within 60 days after completion of his performance, gives the surety and the contractor notice of the amount due, and

    • (2) institutes suit against the surety within one year after the completion of his performance.

  • (g) A subcontractor or subsubcontractor having a claim under the bond has a direct right of action against the surety.

  • (h) The obligation of a surety under this section shall not be affected by any change or modification of the contract between the prime contractor and the owner but the total liability of the surety shall not be greater than the penal sum of the bond.


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