Payment Bond Lawyer
in Houston, TX.

When you're working on a construction project and don't get paid, a mechanic's lien isn’t always available—especially on public projects. That’s where payment bonds come in. If the project is bonded, you may have an avenue for recovery. Whether you’re a general contractor responding to a bond claim, a subcontractor trying to get paid, or a surety assessing a dispute, payment bond issues require swift action, compliance with notice deadlines. A Texas construction lawyer can help you position yourself for success.

At Elkhoury Law, I help clients across the construction chain handle payment bond claims and disputes efficiently. I’ll guide you through the process, help preserve your rights, and fight for the compensation or defense you're entitled to.

Construction Attorney in Houston, TX

In the Houston metro area and throughout Texas, payment bond claims are common on public works projects—from TxDOT highway construction to school district builds to massive water infrastructure projects. Many of these projects are funded by local bonds or federal infrastructure dollars, which require surety bonds in lieu of lien rights.

Under Chapter 2253 of the Texas Government Code, which covers many state, county, and city construction projects,

A governmental entity that makes a public work contract with a prime contractor shall require the contractor, before beginning the work, to execute to the governmental entity:
(1)  a performance bond if the contract is in excess of $100,000;  and
(2)  a payment bond if:
             (A)  the contract is in excess of $25,000, and the governmental entity is not a municipality or a joint board created under Subchapter D, Chapter 22, Transportation Code; or
             (B)  the contract is in excess of $50,000, and the governmental entity is a municipality or a joint board created under Subchapter D, Chapter 22, Transportation Code.

Many private construction developers are requiring payment and performance bonds as well.

What is a Payment Bond in Construction?

A payment bond is a type of surety bond issued by a bonding company (the surety), typically on behalf of the general contractor. It guarantees that subcontractors, sub-subs, laborers, and material suppliers will be paid even if the general contractor fails to do so.

The general contractor pays the premium, typically as part of their contract obligations on public or bonded private projects. Those costs are often passed onto the developer. Premiums are priced based on a percentage of the total contract value, and the exact percentage will depend on project size, risk and the general contractor’s creditworthiness.

If a claim is made against the bond, and the surety pays it, the surety will often try to recover the amounts it pays from the general contractor. If disputed, this can turn into complicated and expensive construction defect, change order, and/or delay litigation.

Payment bonds offer an alternative to mechanic's liens—but come with tight procedural requirements that vary by project type and claimant tier.

What is a Performance Bond in Construction?

A performance bond is a type of surety bond that guarantees the general contractor will complete the construction project in accordance with the contract terms. If the contractor defaults or fails to meet performance obligations—whether due to insolvency, delays, or substandard work—the surety (bonding company) may step in to complete the project, hire another contractor, or compensate the project owner for losses.

Unlike a payment bond, which protects subcontractors and suppliers, a performance bond protects the project owner or public entity. But when performance is disputed—due to delays, design changes, or noncompliance—all parties may become entangled, including sureties, subs, and even architects. Like payment bond disputes, performance bond disputes often overlap with change order, termination, or construction defect issues.

How do Payment and Performance Bond Disputes Arise?

Bond disputes often arise from missed deadlines, unclear contract terms, or breakdowns in project execution. Whether the dispute involves nonpayment or nonperformance, the stakes are high and the procedural rules can be unforgiving—especially on public projects governed by Texas law.

Common Payment Bond Disputes

• Untimely or improper notice from subcontractors or suppliers

• Disputes over whether the claimed work or materials were within scope

• Multiple claims on the same bond, especially in default or termination scenarios

• Allegations of overbilling or backcharges raised by general contractors

• Claims exceeding the penal sum of the bond, forcing sureties to allocate risk or deny coverage

In Texas, public projects require strict notice compliance under Chapter 2253 of the Government Code. Private bonded projects may impose similar—but contractually defined—requirements. A single missed deadline or defective notice can waive your entire claim. You can contact a Texas construction lawyer to make sure you don’t miss your notice deadlines.

Common Performance Bond Disputes

• Alleged contractor default, including failure to complete the work, defective performance, or significant delay

• Disagreements over whether the contractor truly defaulted, especially in cases involving owner interference or delayed payments

• Termination without proper notice to the surety, which may void the bond obligations

• Conflicts over scope, where the owner expects performance beyond what the contract requires

• Surety refusal to step in, often due to procedural missteps or factual disputes

Performance bond disputes often involve high-dollar, high-complexity issues, particularly when a project is behind schedule or at risk of abandonment. Owners want the surety to finish the work, while contractors argue they were wrongfully pushed out. These disputes can quickly escalate to litigation involving contractors, owners, sureties, and project managers.

Whether you're seeking payment under a bond or defending a claim, early legal intervention is critical. At Elkhoury Law, I help clients preserve claims, defend their performance, and manage surety relationships strategically.

How Elkhoury Law Helps With Bond Claims and Disputes

I assist contractors, subcontractors, suppliers, and sureties with:

• Evaluating Payment Bond Rights
  Reviewing contracts and bond documents to determine if you're covered and what procedures apply.

• Notice and Claim Compliance
  Drafting and serving notices that meet Texas Government Code and bond-specific requirements.

• Enforcing or Defending Bond Claims
  Representing parties in mediation, litigation, or arbitration involving bond claims for unpaid work, defective performance, or overpayment.

• Surety Risk Mitigation
  Advising sureties and GCs on how to manage exposure, mitigate claims, and resolve payment disputes efficiently.

• Private Project Bond Claims
  Navigating disputes on privately bonded jobs, including design-build and energy-sector projects.

Need Help With a Bond Claim or Dispute? Call Elkhoury Law Today

Texas construction bond law can be technical and unforgiving. If you're owed money on a bonded project—or are being targeted by a questionable claim—waiting can cost you your rights. Elkhoury Law provides construction-specific, Texas-focused legal counsel to help you recover what you're owed or protect your company from risk.