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By Travis Yule — CEO & Founder, Full Send Funding
Lien and bond rights are the collateral behind a construction receivable: 90 days from last furnishing to Miller Act notice, a year to sue, or the right lapses.
In one sentence: A mechanics lien or payment bond claim is not a collection tool but the collateral behind a construction receivable — granted by statute, nearly free to keep, expiring on a clock run from last furnishing — so a receivable that kept its rights is a dated inflow and one that lost them is unsecured credit.
A mechanics lien and a payment bond claim are not collection tools. They are the reason a construction receivable is worth something to anyone other than the customer who owes it. A subcontractor with its notice served, its deadlines calendared and a copy of the bond in the file is owed money by a piece of real property, or by a surety, as well as by a general contractor it did not choose. A subcontractor whose deadlines have passed is owed money by that general contractor alone, on an unsecured basis, at whatever pace the general contractor decides. The invoice is identical. The asset is not.
The usual framing gets this backwards. Liens are treated as the thing you do when a relationship has broken down, so the paperwork that preserves them — a preliminary notice at the start of a job, a written notice to the prime inside ninety days on federal work — is skipped while the job is going well, which is the only time it can be done. The right framing is financial: lien and bond rights are the collateral behind your receivables, they are granted by statute rather than negotiated, they cost almost nothing to keep, and they expire on a clock. Keeping them is the cheapest capital decision a contractor makes all year.
This article sets out the three routes to the same money — the lien on private work, the federal payment bond under the Miller Act, and the state payment bonds under the statutes modelled on it — with the federal clock worked to the day, and explains how we read a receivable that carries those rights against one that has lost them. It does not tabulate the fifty states' lien deadlines; the reason is in its own section. This is information, not legal advice; the statute and the contract control, and a construction attorney in your state should read yours.
On a private job the money you are owed is secured, if you have kept the right, by the building you improved. On a public job it is secured by a bond, because public property as a general rule cannot be liened and the legislature substituted a surety's promise for the security the lien would have given. Around both sits a third route that has nothing to do with security at all: prompt payment statutes, which attach a deadline and an interest rate to approved amounts and, in some states, a right to stop work.
The federal rows state 40 U.S.C. §3131 and §3133 and FAR 52.232-5; the Texas row states Texas Property Code §53.101. The lien and Little Miller Act rows describe the common structure of state statutes without quoting any state's deadline — those numbers belong in a verified state-by-state table, not here.
The three routes are not alternatives to be chosen between. They run on separate clocks, they are preserved by separate documents, and losing one does not cost you the others. A subcontractor on a bonded private job in Texas can be holding a lien right against the property, a claim against the bond, a statutory fund the owner is obliged to reserve, and a prompt payment interest claim at the same time. Which of them actually produces the money depends on which the subcontractor kept alive.
A mechanics lien is a statutory security interest in the improved property in favour of those who furnished labour or material to it. Three things follow from that sentence, and each one changes what the lien is for.
It is against the property, not against the person who owes you. The general contractor who has not paid you may be judgment-proof, dissolved or simply slow. The building is none of those things. An owner with a lien on its title cannot refinance, sell or close out its own construction loan without dealing with it, which is why a lien is answered by a party that was not otherwise thinking about you at all.
It comes from the statute, not from your subcontract. You did not negotiate it and, in many states, you cannot be made to waive it in advance. That is a considerable protection when the payment clause above you is a pay-if-paid clause designed to shift the owner's credit risk onto you; the difference between pay-when-paid and pay-if-paid governs the contract claim, and in a number of states it leaves the lien alone.
It is conditional on procedure, and the procedure runs on a calendar. Every state's lien law has some combination of three clocks: a preliminary notice that has to go out early in the job, in many states measured from the day you first furnished labour or material; a filing or recording deadline for the lien itself, measured from your last furnishing or from the project's completion; and an enforcement deadline after filing, past which the recorded lien lapses. The clocks are short, they are strict, and a lien filed a day late is not a weak lien — it is no lien.
The last point is the one that connects the lien to capital. A right that exists only if a notice went out in the first weeks of the job is a right that has to be managed as routine, on every job, by somebody whose name is on it. Contractors do not lose lien rights because the law is against them. They lose them because a deadline passed while the job was going fine.
Federal construction is where the bond replaces the lien entirely, and the federal statute is the cleanest place to see how a payment bond works because every state's public-works bond statute is a variation on it.
When the bond exists. Before any contract of more than $100,000 is awarded for the construction, alteration or repair of a public building or public work of the federal government, the contractor must furnish two bonds: a performance bond for the protection of the government, and a payment bond for the protection of all persons supplying labour and material in carrying out the work.[1] The contracting officer may waive both for work performed in a foreign country where furnishing them is impracticable, and nothing in the section stops an officer requiring additional security.[1] The bond becomes binding when the contract is awarded.[1]
Who the bond premium is paid by. On a fixed-price federal construction contract the government reimburses the contractor, on request, for the premiums paid on the performance and payment bonds once it has evidence of full payment to the surety, and the retainage provisions do not apply to the portion of a progress payment attributable to those premiums.[3] The bond that protects you is, in other words, paid for by the customer on that kind of contract.
Who can claim. Every person that has furnished labour or material in carrying out work provided for in a bonded contract, and that has not been paid in full within 90 days after the day it last performed the labour or furnished the material, may bring a civil action on the payment bond for the amount unpaid.[2] A first-tier subcontractor — one with a direct contract with the prime — needs no notice; the 90 days of non-payment is the only precondition.
The 90-day notice. A person having a direct contractual relationship with a subcontractor, but no contractual relationship, express or implied, with the contractor that furnished the bond, may bring an action on the bond only on giving written notice to that contractor within 90 days from the date on which it last performed labour or supplied material.[2] That describes the sub-subcontractor and the supplier to a subcontractor — the second tier. The notice must state with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or for whom the labour was done, and it is served either by any means that provides written, third-party verification of delivery to the contractor at any place it maintains an office or conducts business, or at its residence, or in any manner in which a United States marshal may serve a summons.[2] The words that matter are written, third-party verification of delivery: an email with nothing to prove it arrived is not service, and a claim that fails on the method of service fails completely.
The one-year bar. An action on the bond must be brought no later than one year after the day on which the claimant last performed labour or supplied material.[2] Not one year from the invoice, not one year from the notice, and not one year from the day payment was refused.
Read together, the two sections put every claimant on a single calendar that starts on one date — the day you last furnished — and a claimant who cannot prove that date from its own daily reports and delivery tickets cannot prove that any of its deadlines were met. Last furnishing is the date to record on every federal job, on the day it happens, whether or not anyone is late.
Every state has its own statute requiring a payment bond on some or all of its public work, and the family name for them — Little Miller Acts — is accurate about the structure and misleading about the detail. The structure is the same: public property cannot carry the lien, so the legislature requires the prime to bond the job, and the statute gives unpaid subcontractors and suppliers a claim on the bond subject to a notice requirement and a suit deadline. The detail is not: the contract threshold at which a bond is required, the tiers that may claim, the days allowed for notice, what the notice must contain, who it goes to and how long you have to sue all differ from state to state, and several differ again between state agencies and municipalities in the same state.
Two practices survive every variation.
Get a copy of the bond before you mobilise. On most public work the statute entitles you to a copy, and the day you actually need it is the day nobody above you is in a hurry to send it. A bond you cannot produce is a bond you cannot claim against, and you cannot serve a notice on a surety you cannot name.
Calendar the notice from the day you last furnish, and serve it whether or not you are worried. A bond notice is not an accusation. It is a form the statute provides for, sent to a party the statute names, that keeps a right alive; a prime contractor that reacts to a routine notice as a hostile act is telling you something about how it intends to pay.
This article does not publish a table of the states' lien and bond deadlines, and the reason is worth stating rather than hiding. A deadline table on a lending site is read as an instruction, and a wrong cell in it costs a reader the whole claim. Each of those deadlines is a specific number in a specific statute — some measured in days from first furnishing, some from last furnishing, some from completion or from a recorded notice of completion, some in months — and every one of them belongs in a piece that has been verified against the official text of the statute, cell by cell, the way the retainage laws by state and the prompt payment laws by state were built. Until that piece exists, the deadline in your state comes from your statute and your attorney, not from us.
What can be said with confidence is the shape, because the shape is common to every state. Three clocks: notice at the start, filing after the end, enforcement after filing. Two questions that decide which clock applies to you: whether you have a direct contract with the owner, and whether the project is public or private. One date that has to be provable from your own records: the day you last furnished labour or material.
One state's private-work rule is worth naming because it works in the opposite direction from the others and it is in our verified sources. In Texas the owner of a private project is required to reserve 10% of the contract price during the progress of the work and for 30 days after completion — a statutory fund held for the benefit of lien claimants, which the owner does not withhold by choice but by obligation.[6] A Texas subcontractor with its notices in order is looking at a defined pot of money that the statute told the owner to keep. That is the clearest example in the country of what a preserved lien right is: not a threat, but a reservation of funds made in your favour before anyone was late.
Abstractions do not make payroll, so here is the whole thing with numbers.
An electrical subcontractor runs a weekly payroll of $38,000 and earns a 6% net margin. On March 10, 2026 it finishes its scope on two jobs at once.
Job A is a $600,000 subcontract to a general contractor on a private office building. Through the March application the subcontractor has billed $450,000, of which the general contractor has paid $270,000. The remaining $180,000 is made up of $45,000 of retainage — 10% of the $450,000 billed — and $135,000 for the February and March applications, both approved and both past due.
Job B is a $240,000 sub-subcontract on a federal building, under a mechanical subcontractor that holds the contract with the prime. The prime's contract is above $100,000, so it carries a Miller Act payment bond.[1] The subcontractor is a second-tier claimant: it has a direct contract with a subcontractor and none with the prime. $64,000 is unpaid.
Between the two jobs, $244,000 is outstanding on work that is finished — 6.4 weeks of payroll. Measured against what Job A will earn, the $180,000 outstanding there is five times the $36,000 that a 6% margin produces on a $600,000 subcontract. The job is profitable and the company cannot pay its people from it.
At a 6% net margin the $180,000 outstanding on a $600,000 subcontract is five times the job's entire profit; at 3% it is ten times.
Unpaid balance of $180,000 divided by net profit on a $600,000 subcontract at each margin: profit = $600,000 × margin. The margin range spans what is commonly seen across specialty trades; the worked example uses 6%.
The federal clock on Job B is fixed by the statute and can be written down on March 10, which is when it should be.
Dates are the stated last furnishing plus the statutory period in calendar days: 90 days and one year (365 days; 2026 is not a leap year). The rules are 40 U.S.C. §3133 as quoted in the text. The statute counts from the day of last furnishing; a claimant who cannot prove that date cannot prove any of these were met.
Everything on that calendar runs from a single date, and the notice and the earliest civil action fall on the same day: at 90 days a second-tier claimant must have served its written notice on the prime, and at 90 days of non-payment the right to sue on the bond opens.[2] A subcontractor that serves its notice on June 9 has not filed late by a day. It has no claim on the bond.
The private clock on Job A depends on the state. In every state there is a deadline for the lien measured from March 10 or from the project's completion, in most there was a preliminary notice that had to go out near the start of the job, and if the job is in Texas there is a 10% reserve the owner was obliged to hold.[6] Whether those rights exist on June 8 depends on what the subcontractor did in January, not on anything it can do in June.
What waiting costs. Neither job is disputed; both are simply slow. Suppose the subcontractor carries the $180,000 on Job A while it waits. The cost depends on what it is carried with — a bank line at 11% or a working capital facility at 30% annualized are the two ends of what a subcontractor of this size typically has available — and on how long the waiting lasts.
At 90 days the carry is $4,882 on an 11% bank line and $13,315 on a 30% working capital facility; at 180 days it is $9,764 and $26,630, against a job that earns $36,000 in total.
Simple interest on $180,000 at the stated annualized rate for the stated number of days: cost = $180,000 × rate × days ÷ 365, rounded to the dollar. The two rates are illustrative ends of what a subcontractor of this size typically has available; neither is a quote.
At 90 days the carry is $4,882 on the line and $13,315 on the facility. At 180 days it is $9,764 and $26,630. Against a job that earns $36,000 in total, a receivable carried for six months on the facility has consumed most of the profit before a lien is ever discussed — and that is the cost of the money, before the cost of the lien right itself, which is zero if it was preserved and total if it was not.
We do not lend against construction receivables. We fund construction working capital on revenue and bank activity, we file no UCC-1 lien against the business, and our agreements contain no confession of judgment. But the state of a contractor's receivables decides how its deposits will arrive over the next several months, and that is precisely what the file is read for — so the lien position is read, even though nothing is taken against it. Speaking for how we look at it:
How Full Send Funding reads a construction file. We do not lend against the receivable and file no UCC-1 against the business; the lien position is read because it decides when deposits arrive, which is what the file is read for.
Two things in that table are worth drawing out.
A preserved right changes the date, not the amount. A $180,000 receivable with the lien and bond rights intact is a $180,000 inflow with a range of arrival dates — the owner or surety will resolve it, because it has to. The same receivable with the rights lapsed is $180,000 of unsecured credit extended to a general contractor, and it is sized in the file the way any unsecured receivable is: against the payer's history on this job, not its promise. The number on the aging report is the same. What it does to the term we can offer is not.
A disputed receivable is not a receivable. If the general contractor is withholding because of a defect claim, a backcharge or a change order it has not accepted, the lien secures a claim that has to be litigated before it produces cash, and the honest treatment is to leave it out of the inflow schedule entirely. Capital sized against a disputed amount is capital sized against a lawsuit. The mechanics of change orders that never became receivables are in change orders as unfunded receivables.
There is a different kind of funder for whom the lien right is the collateral rather than context: the factor, which buys the receivable outright. That purchase is a sale of accounts, which Article 9 of the Uniform Commercial Code brings within its scope,[7] and it comes with a financing statement filed against the receivables and, usually, an assignment of whatever lien or bond right the receivable carries. That can be the right structure for a contractor whose receivables are large, undisputed and slow. It is also a public filing that sits across the same receivables your surety and your bank expect to see unencumbered, and what a UCC-1 actually does to the next facility is worth understanding before signing one.
Liens and bonds are rights you exercise after you have finished and not been paid. Prompt payment statutes work earlier, while the money is still moving, and they are invoked far less often than they should be because contractors do not know the numbers.
On federal construction, the prime contractor's own contract carries a clause requiring it to pay each subcontractor within seven days of receiving payment for that subcontractor's work, with an interest penalty running from the eighth day at the federal rate and flowed down through every lower tier — a penalty that is the prime's obligation and never the government's.[4] The clause is written into every federal construction contract by the Federal Acquisition Regulation.[5] The agency's own obligation to the prime runs on the same statute.
The states attach their own clocks and rates, and three examples from the verified statutes show the range:
Two percent a month is 24% a year; one and a half is 18%. Those are not nuisance rates. They are higher than most of the capital a subcontractor would use to carry the same receivable, which is the whole point: the statute prices late payment above the cost of borrowing so that paying on time is cheaper than not. A contractor that carries a late receivable on its own line without invoking the statutory rate is financing its customer at a discount the legislature specifically declined to give.
The prompt payment right does not depend on any notice served at the start of the job, which is why it is the one lever every contractor still holds after every other deadline has gone. It is invoked in writing, with the statute cited and the interest calculated, and it changes the conversation from a request to a citation.
Ranked by how much of the result is in your hands.
The order matters because the cheap items at the top are what make the expensive items at the bottom possible. A contractor that skips the first three has, without deciding to, chosen to be an unsecured creditor of every general contractor it works for.
A lien or bond claim is the wrong answer more often than the enthusiasm around it suggests, and the cases are worth naming plainly.
When the deadline has already passed. A late lien is not a weak lien; it is an invalid one, and recording one you know to be invalid can create exposure of its own. The honest response to a missed deadline is the prompt payment demand and a candid conversation with the general contractor, not a filing.
When the amount is disputed on the merits. A lien for work the owner says is defective secures a lawsuit, not a payment. If the dispute is real, resolve the dispute; the lien preserves your position while you do, but it will not shortcut the argument.
When the general contractor is solvent and merely slow. A solvent general contractor with a good history on the job will pay. The statutory interest demand costs nothing and usually works; a lien on its customer's property, filed without the notice a routine bond claim would have carried, spends a relationship to accelerate money that was coming. Preserve the right, invoke the rate, and keep the filing in reserve.
When the project is public and you have not got the bond. There is no lien to file on public property, and a bond claim against a surety you cannot name is not a claim. The tool here is a written request for a copy of the bond, made first.
When you have signed an unconditional waiver for money you have not received. A lien waiver traded for a cheque that then bounces, or signed on a progress payment as a condition of the next draw, may have released the right for that period. Read every waiver form for the word unconditional and for the through-date, and never sign one for money not yet in the account.
When the problem is your own closeout. If the retainage is late because as-builts, warranties and final waivers from your own tiers have not been delivered, the lien is pointed at the wrong party. The retainage problem is mostly a closeout problem, and a lien does not close anything out.
And when the receivable is genuinely secured, genuinely undisputed and genuinely slow, the question is how to carry it without paying more for the money than the job earned. That is a working capital question, and the answer should match the term of the money to the date the statute makes likely, not to a four-month product refinanced three times before the surety pays. Our funding runs from $5,000 to $10 million on terms from four months to three years, our cost of capital runs from 4.5% to 45% depending on qualifications and term, and the bar to apply is three or more months in business and $10,000 a month in revenue, with a decision within 24 business hours on a soft credit pull only.
A mechanics lien and a payment bond claim are what make a construction receivable an asset rather than an unsecured promise from a general contractor you did not choose. Both are granted by statute, both cost almost nothing to keep, and both expire on a clock that runs from the day you last furnished labour or material: on federal work, a second-tier claimant must serve written notice on the prime within 90 days, may sue on the bond once 90 days have passed unpaid, and must sue within one year, with the bond required on every contract above $100,000 and its premium reimbursed by the customer on fixed-price work. State lien and Little Miller Act deadlines follow the same three-clock shape — notice at the start, filing after the end, enforcement after filing — with numbers that belong in a verified table and not in a paragraph. Prompt payment statutes are the lever that survives every missed deadline, and their rates — 1% to 2% a month in the states shown here — are deliberately set above the cost of borrowing. A funder reads a preserved right as a date and a lapsed one as unsecured credit; the number on the aging report is the same, and what it does to the term is not.
If you want to talk through a specific receivable — a bonded job that is slow, a lien window that is closing, or a spring where two jobs finished at once — call 518-312-0382 or check what you would qualify for. It takes about a minute and uses a soft credit pull only.
The legal framework is stated from the primary texts cited: the Miller Act's bonding requirement and claim provisions (40 U.S.C. §3131 and §3133), the federal payment clause for fixed-price construction (FAR 52.232-5), the federal Prompt Payment Act's construction provisions (31 U.S.C. §3905) and the clause carrying them into federal contracts (FAR 52.232-27), Texas Property Code §53.101 on the owner's statutory reserve, New York UCC §9-109 on the scope of Article 9, and the New York (General Business Law §756-a and §756-b, State Finance Law §139-f), California and Texas prompt payment statutes named in the text. State mechanics lien and Little Miller Act deadlines are described by their common structure only; no state's deadline is quoted, because each belongs in a table verified cell by cell against the official statute, and this article does not contain one.
The worked example is derived, not surveyed: an electrical subcontractor with a $38,000 weekly payroll and a 6% net margin, a $600,000 private subcontract billed to $450,000 with $270,000 paid and 10% retainage, a $240,000 federal sub-subcontract with $64,000 unpaid, and a last furnishing of March 10, 2026 on both. The Miller Act calendar adds the statutory 90 days and one year to that date; the carry-cost figure applies simple interest at 11% and 30% annualized to $180,000 for the days shown; the unpaid-to-profit figure divides $180,000 by the profit a $600,000 subcontract earns at each margin. Every published value is recomputed from those inputs by the site's arithmetic audit before publication. The two rates and the margin range are illustrative, not measured industry figures, and no such figures are claimed.
There is no public dataset of how often subcontractors lose lien or bond rights to a missed deadline, of how often payment bond claims are paid without suit, or of the share of construction receivables that carry preserved rights; where the article characterises those things it does so from the firm's own underwriting of contractors and says so.
A mechanics lien is a statutory security interest in the improved property on private work; a payment bond claim is a claim against a surety on public work, where the property cannot be liened. Both are granted by statute, both run on notice and suit deadlines counted from the day you last furnished labour or material, and losing one does not cost you the other.
Before a federal contract above $100,000 for the construction, alteration or repair of a public building or public work is awarded, the contractor must furnish a performance bond protecting the government and a payment bond protecting everyone who supplies labour and material on the work. On fixed-price construction the government reimburses the bond premiums on request.
A claimant with a direct contract with a subcontractor but no contract with the prime that furnished the bond — a sub-subcontractor or a supplier to a subcontractor. The written notice must reach the prime within 90 days of the claimant's last furnishing, by a means that gives written third-party verification of delivery. A first-tier subcontractor with a direct contract with the prime needs no notice.
A civil action on the bond may be brought once you have gone unpaid for 90 days after the day you last performed labour or supplied material, and must be brought no later than one year after that day. The year runs from last furnishing, not from the invoice, the notice or the refusal to pay.
Yes, because they change what the receivable is. With the rights preserved, an unpaid balance is owed by the property or a surety as well as by the general contractor, and a funder can treat it as a dated inflow. With the rights lapsed it is unsecured credit to the general contractor, and it is read that way whether or not you ever meant to file.
A state statute modelled on the federal Miller Act that requires a payment bond on that state's public work and gives unpaid subcontractors and suppliers a claim on it. The structure is the same everywhere; the contract threshold, the tiers that may claim, the notice period and the suit deadline differ by state, so the statute and a copy of the bond are the documents to have before mobilising.
Usually, under a prompt payment statute. Federal primes owe subcontractors an interest penalty from the eighth day after receiving payment; New York private work carries one percent a month, California a 2% monthly penalty on wrongfully withheld progress payments, and Texas one and one-half percent a month on overdue amounts. The right needs no notice at the start of the job and is invoked in writing with the statute cited.
No. We fund construction working capital on revenue and bank activity, file no UCC-1 lien against the business and take no assignment of lien or bond rights. The state of a receivable's rights is read because it decides when deposits will arrive, which is what a working capital file is sized on.
Travis Yule founded Full Send Funding in 2021 and leads it from Middle Grove, New York. He writes about working capital from the underwriting side of the table — what the numbers actually have to say before a business gets funded.