Payment Bond Claims on Texas Public Projects

By Hank FasthoffJuly 5, 2026

A payment bond is the payment remedy on a Texas public construction project because a mechanic's lien doesn't attach to public property. On a private project, an unpaid subcontractor or supplier looks to Chapter 53 and the land itself. On a public project, the bond replaces that lien remedy.

Texas Government Code Chapter 2253, historically called the McGregor Act, sets the state bond claim rules. The deadlines are monthly, the notices are technical, and a claimant who waits until the project ends can lose the bond claim before the final invoice is due.

Confirm the Project and Bond First

Chapter 2253 applies to public work contracts made by a governmental entity, including the state, a county, a municipality, a department, board, or agency of any of them, and a school district. A public work contract includes a contract for constructing, altering, or repairing a public building or performing or completing public work.

Section 2253.021 requires a payment bond when the public work contract exceeds $25,000, unless the governmental entity is a municipality or a joint airport board created under the Transportation Code. For those entities, the payment bond threshold is more than $50,000. A performance bond is required when the contract exceeds $100,000.

Chapter 2253 sets the amount and beneficiary for each bond. Each bond must be in the amount of the contract. Payment bonds protect payment bond beneficiaries who have a direct contractual relationship with the prime contractor or a subcontractor to supply public work labor or material. Performance bonds protect the governmental entity awarding the contract.

In an opinion issued February 5, 2026, the Texas attorney general concluded in KP-0514 that § 2253.021(a) imposes a mandatory duty on a governmental entity to require the performance and payment bonds, even though the statute attaches no penalty to noncompliance. The opinion states the attorney general's current reading, and courts retain final authority.

If a governmental entity fails to obtain a required payment bond, § 2253.027 creates a separate remedy. The entity is subject to the same liability a surety would have if the surety issued the bond, and a payment bond beneficiary is entitled to a lien on money due to the prime contractor in the same manner and to the same extent as if the contract were subject to Subchapter J, Chapter 53, Property Code. That remedy applies to contract money in the entity's hands, not the public land.

Get the Bond and Contract Before You Calendar

You should request the bond and contract documents as soon as payment slows. Under § 2253.024, a prime contractor must provide, on written request from a person who provides public work labor or material, the name and last known address of the governmental entity, a copy of the payment and performance bonds, and the name of the surety. A subcontractor also may have to provide downstream information, including supplier names, lower tier subcontractor names, and any bond the subcontractor furnished for its own subcontractors and materialmen.

Requested information must be provided within a reasonable time, but not later than the 10th day after receipt of the written request. A person who fails to provide required information is liable for the requesting person's reasonable and necessary costs incurred in getting it.

A governmental entity must furnish a certified copy of the payment bond, any attachment to the bond, and the public work contract to a person who applies and submits an affidavit that the person supplied unpaid public work labor or material, contracted for unpaid specially fabricated material, or is being sued on a payment bond. The certified copy is prima facie evidence of the content, execution, and delivery of the original.

Who Can Make a Texas Bond Claim

A payment bond beneficiary is the person Chapter 2253 protects through the required payment bond. The bond protects claimants with a direct contractual relationship with the prime contractor or a subcontractor to supply public work labor or material.

Public work labor means labor used directly to perform the public work. Public work material includes material used or ordered and delivered for direct use, specially fabricated material, reasonable rental and actual running repair costs for construction equipment used or reasonably required and delivered for use at the project site, and power, water, fuel, and lubricants used or ordered and delivered for direct use.

That definition controls equipment and supply claims. Chapter 2253 doesn't cover every business expense tied to the job. It covers labor and material that fit the statutory categories.

Monthly Notice to the Prime Contractor and Surety

To recover on a Texas payment bond for unpaid labor or material, a payment bond beneficiary must mail written notice of the claim to the prime contractor and the surety. The notice must be mailed on or before the 15th day of the third month after each month in which any of the claimed labor was performed or any of the claimed material was delivered.

If you performed unpaid work in January, the third month notice is due by April 15. If you performed unpaid work in January and February, each month needs its own notice calendar. January work has an April 15 deadline, and February work has a May 15 deadline.

A sworn statement of account must accompany the notice. The statement must say, in substance, that the amount claimed is just and correct and that all just and lawful offsets, payments, and credits known to the affiant have been allowed. If retainage is part of the account and hasn't become due under the contract, the statement must include that retainage amount.

If a written agreement exists, § 2253.042 allows the claimant to enclose a copy of the agreement and a statement of the completion or the value of partial completion of the agreement. If no written agreement exists, § 2253.043 requires the notice to identify the party for whom labor was performed or to whom material was delivered, the approximate date of performance or delivery, a description sufficient for reasonable identification, and the amount due. A claimant must also generally itemize the claim and include copies of documents, invoices, or orders that reasonably identify the labor or material, the job, and the delivery destination.

Claimants Without a Direct Prime Contract Need an Extra Notice

If you don't have a direct contractual relationship with the prime contractor, § 2253.047 adds a second month notice to the prime contractor. That notice must be mailed on or before the 15th day of the second month after each month in which the labor was performed or the material was delivered. A copy of the statement sent to your subcontractor is sufficient for this notice.

For January work, the second month notice to the prime contractor is due by March 15. The third month notice to the prime contractor and surety is due by April 15. A lower tier claimant should calendar both.

Specially fabricated material has its own lower tier notice. A claimant without a direct prime contract must mail written notice to the prime contractor on or before the 15th day of the second month after the receipt and acceptance of the order, stating that the order has been received and accepted.

Section 2253.047(e) limits the additional notice section for an individual mechanic or laborer wage claim, but the wording is awkward enough that a claimant shouldn't rely on that subsection without project-specific review. For companies, suppliers, and lower tier subcontractors, the second month notice belongs on the bond claim calendar unless a project-specific review shows otherwise.

Retainage Claims Have Their Own Rules

Chapter 2253 treats retainage separately. If your contract with the prime contractor or a subcontractor provides for retainage, § 2253.046 requires written notice of the retainage claim to the prime contractor and the surety on or before the 90th day after the date of final completion of the public work contract.

That retainage notice must state the amount of the contract, any amount paid, and the outstanding balance. You don't need a separate retainage notice if the amount claimed is part of a prior claim under the notice subchapter. Under § 2253.076, a retainage claim is never valid for more than 10% of the claimant's contract amount or for more than the retainage the contract specifies.

A lower tier claimant with contractual retainage has an additional early notice. Under § 2253.047(b), a claimant who contracts with a subcontractor for retainage must notify the prime contractor by the 15th day of the second month after beginning to deliver material or perform labor. The notice must state that the contract provides for retainage and generally indicate the nature of the retainage.

Notices Must Be Mailed Correctly

Chapter 2253 notices must be sent by certified or registered mail. For private projects, Chapter 53 no longer lists registered mail as a notice method, but Chapter 2253 allows certified or registered mail for public project bond notices. Notices to the prime contractor must be addressed to the contractor's residence or last known business address. A claimant satisfies the surety notice requirement by mailing the notice to the surety at the address stated on the bond or an attachment to the bond, at the address on file with the Texas Department of Insurance, or at any other address allowed by law.

You should keep the mail receipts, tracking history, notice package, sworn statement, invoices, and any bond or contract request. A surety evaluating a claim will look first for missed deadlines and defective proof.

Filing Suit on a Texas Payment Bond

A payment bond beneficiary may sue the principal or surety, jointly or severally, if the claim isn't paid before the 61st day after the date the notice for the claim is mailed. Suit may be brought for the unpaid balance of the claim at the time the claim was mailed or the suit is brought, plus reasonable attorney's fees.

You should treat fee recovery as discretionary. Section 2253.073 lists reasonable attorney's fees as part of what suit may seek, and § 2253.074 provides that a court may award costs and reasonable attorney's fees that are equitable in a proceeding to enforce a payment bond claim or to declare part of a claim invalid.

A payment bond suit may not be brought after the first anniversary of the date the notice for the claim is mailed. Venue lies in a court in a county in which any part of the public work is located.

The Bond Claim May Not Be the Only Claim

Chapter 2253 controls the claim against the payment bond. A claimant who misses the bond notice deadline can't avoid that problem by relabeling the same bond claim.

But the Texas Supreme Court refused to treat the McGregor Act as wiping out every other claim arising from nonpayment. In Dealers Electrical Supply Co. v. Scoggins Construction Co., 292 S.W.3d 650 (Tex. 2009), an electrical subcontractor walked off a bonded school project and left its supplier unpaid. After missing the bond claim deadline, the supplier sued the prime contractor under the Texas Construction Trust Fund Act and on a joint check agreement, and the court held the McGregor Act wasn't the supplier's exclusive remedy.

That distinction is practical. A missed bond deadline may kill the bond claim, but it may not kill a separate contract, trust fund, or joint check claim. Each theory needs its own elements, deadlines, defendants, and proof.

Federal Projects Follow the Miller Act

Federal construction projects follow the Miller Act, not Chapter 2253. Under 40 U.S.C. § 3131, a federal contract of more than $100,000 for the construction, alteration, or repair of a public building or public work requires a performance bond and a payment bond before award, and inflation adjustments in the Federal Acquisition Regulation put the operative bonding threshold at $150,000.

A claimant with a direct contract with the federal prime contractor may sue on the payment bond if it hasn't been paid in full within 90 days after the day it last performed labor or supplied material for the claim. No pre-suit notice to the prime contractor is required for that direct claimant.

A claimant with a direct contract with a subcontractor, but no contractual relationship with the federal prime contractor, must give written notice to the prime contractor within 90 days after the claimant last performed labor or supplied material for the claim. 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 labor was performed, and it must be served by a means that provides written third party verification of delivery.

A Miller Act suit must be brought in the name of the United States for the use of the claimant and filed in the United States District Court for a district in which the contract was to be performed and executed, regardless of the amount in controversy. Suit must be filed no later than one year after the day the claimant last performed labor or supplied material.

The claim clocks run differently. Both Miller Act deadlines, the 90 day notice where required and the one year suit deadline, run from the claimant's last labor or material. Both Texas deadlines, the 61st day after mailing and the one year suit deadline, run from the date the claim notice is mailed. A claimant working both project types can't safely reuse one calendar for the other.

Build the Claim Calendar Before Payment Fails

You should identify the project owner, the prime contractor, the surety, the bond number, your contract tier, each month of unpaid labor or material, any specially fabricated material, and any contractual retainage. You should request the bond and contract documents before the dispute turns into litigation.

For a Texas public project, you should calendar the second month notice if you lack a direct prime contract, the third month notice to the prime contractor and surety, any retainage notice, the 61st day after mailing, and the one year suit deadline. For a federal project, you should calendar the 90 day Miller Act notice where required and the one year suit deadline from your last labor or material.

Public project payment claims are won or lost on paper before they're argued in court. The bond provides a payment source, but only if the notices, sworn statement, mailing proof, and suit deadline line up with the statute.