AIA Amends Payment Bond Form

Kegler Brown Construction Newsletter

Recent state and federal court decisions have interpreted Section 6 of the AIA A-312 (1984) Payment Bond form. Those decisions have held that sureties that do not send an answer to the claimant within 45 days have waived the right to subsequently dispute claims. As a result, several national surety companies have refused to issue payment bonds without significant modifications to the language of A-312 (1984).

In reaction to these cases and the referral of some bonding companies to utilize the AIA A-312 (1984) bond form, AIA has agreed to modify the form in the following respects:

  • Bonding companies will have 60 (rather than 45) days to respond to the claim;
  • When bonding companies fail to do so, they will not be waiving their defenses; but,
  • In that event, the bonding companies may be liable for the claimant's legal fees should the claimant prevail.