I. Insurance Coverage for the Construction Project

The primary insurance goal for every construction project should be that there are no gaps in coverage. This means there should be insurance coverage for the improvements being constructed and coverage for potential liability arising out of accidents that may occur.

Every player involved in the construction project should have a qualified insurance agent with experience in providing insurance for construction related jobs. The agent must be familiar with the typical contractual provisions pertaining to insurance coverage and indemnity. The insurance agent must be able to review the contract documents and make sure that all necessary insurance is provided that is needed to protect the parties to the construction contract from any potential liability and comply with any contractual obligations.

II. Types of Insurance

A. Losses that Must be Covered

The types of loss that typically must be covered for a construction project are damages to the improvements being constructed, injuries to employees, personal injuries not covered by workers compensation and property damage arising out of acts or omissions in performing the construction project.

1. Damage to the Improvements - Builders Risk Coverage

Builder's Risk coverage is normally provided by the owner and may be specifically required by the agreement between the owner and the general contractor. The bank financing the project will also require this. This coverage insures the improvements against loss during the period of construction. The general contractor should require that it be provided for the benefit of the owner, general contractor and subcontractors. This insurance is crucial so that funds are available to repair or replace damaged improvements.

2. Injuries to employees - Workers Compensation

Most general contractors and subcontractors are contractually required to provide workers compensation coverage. This type of coverage will provide workers compensation benefits to any employee of the contractor who sustains an on the job injury. Typically, this will be the workers exclusive remedy as to the contractor carrying this insurance. Texas Labor Code §408.001. However, the worker may still be able to sue other third party contractors that did not employ the worker at the time of the occurrence whose negligence contributed to the workers bodily injuries.

3. Liability for Injuries or Property Damage - Commercial General Liability

General contractors and subcontractors will also normally be contractually required to provide proof of Commercial General Liability Coverage. In this context, the contractor will usually be contractually required to provide coverage against property damage and bodily injury for which the contractor is legally responsible or for which the contractor has agreed to provide indemnity. The general contractor will normally agree to indemnify the owner in the event the owner is sued by a third party for property damage or bodily injury arising out of the operations of the contractor. Similarly, the subcontractor will normally agree to indemnify the general contractor.

These clauses will vary from contract to contract as to the extent of the indemnity required. Some may only require indemnity to the extent the party providing indemnity is negligent. Others may require indemnity except for the sole negligence of the party being indemnified. The most expansive will require indemnity even for the express negligence of the party being indemnified. However, in order for this most expansive clause to be enforceable, the contract must follow the express negligence rule and explicitly state that indemnity is being provided for the negligence of the party being indemnified. See Ethyl Corporation, et al v. Daniel Construction Company, 725 S.W.2d 705 (Tex. 1987).

The general contractor may also be required to name the owner and the subcontractor may be required to name the general contractor as an additional insured on their commercial general liability policies. These are all issues that must be specifically discussed with an insurance agent or broker experienced in providing insurance for construction projects. The insurance agent should be provided with a copy of the applicable contract to make sure that the necessary insurance has been secured.

Commercial general liability coverage also acts as a gap filler to cover claims that an injured worker may have that are not excluded by the workers compensation laws. For example, if a worker of subcontractor A is injured because of the negligence of Subcontractor B, the worker will not be able to sue Subcontractor A for negligence because Subcontractor A has workers compensation insurance and is the employer of the injured worker. However, the exclusive remedy provisions of the workers compensation act do not protect Subcontractor B, and the worker can recover damages from subcontractor B. In that instance, Subcontractor B's commercial general liability policy will provide coverage to Subcontractor B.

General liability coverage will either be provided on a claims made basis or an occurrence basis. If it is provided on a claims made basis this means the third party claim must be made during the policy period to be covered. On the other hand, if it provided on an occurrence basis, this simply means that the property damage or injury must have been sustained during the policy period to be covered. Typically, the contractor will also need to include completed operations coverage to cover losses occurring after the construction project is completed.

4. Business Auto Insurance

General contractors and subcontractors will probably be contractually required to provide this type of insurance. The commercial general liability policy may not cover damages caused by automobile accidents. Each contractor should have this coverage so that they are protected against liability arising out of automobile accidents.

III. The insurer's Duties - Defense and Indemnification

A. The Duty to Defend

1. Contractual Duty

Most liability insurance policies contractually require the insurer to provide a defense for the insured against any claims within the scope of coverage. In Texas, an insurer's contractual duty to defend must be determined solely from the face of the lawsuit by the claimant, without reference to any facts outside the lawsuit. The duty to defend arises when a third party sues the insured on allegations that, if taken as true, potentially state a cause of action within the terms of the policy. Houston Petroleum Company v. Highlands Insurance Company, 830 S.W.2d 153 (Tex. App. - Houston [1st District] 1990, writ denied). Further, even if only some of the allegations involve claims that are covered by the policy, the insurer must still defend the insured against all the allegations. Admiral Insurance Co. v. Rio Grande Heart Specialists of South Texas, Inc., 64 S.W.3d 497, 503 (Tex. App. ¿ Corpus Christ, 2002).

As part of its duty to defend, the carrier normally has the right to choose the defense lawyer and control the defense of the claims being made. The carrier also has the right to decide whether to settle the case and the insured cannot agree to any settlement without the consent of the carrier.

2. Reservation of Rights Letter

In the event a liability claim is made against the carrier's insured and the carrier contends that the claims being made are not covered, then the carrier may refuse to defend the insured. However, it is very risky for an insurance carrier to simply refuse to defend the insured because if it is later determined that the insurance carrier is wrong and the insured settles the case, the insurance company must indemnify the insured for the full amount of the settlement even if the insurance carrier did not approve the settlement. Gulf Insurance Company v. Parker Prod., 498 S.W.2d 676, 679 (Tex. 1973). In other words, the insurance carrier gives up its right to enforce the provisions in the insurance policy that require the insured to obtain consent from the carrier before entering into a settlement. Alternatively, the carrier may issue a reservation of rights letter stating that it will pay for the defense but reserves its right to dispute coverage. This should preserve the carrier's right to consent to any settlement in order for the insured to have the right to seek indemnity from the carrier. If an insured receives a denial of coverage or a reservation of rights letter, the insured should contact their attorney immediately.

3. Liability of Carrier for Wrongfully Refusing to Defend

In the event the carrier wrongfully refuses to defend its insured, the carrier may have to reimburse the insured for the costs of defense as well as for any judgment taken against the insured. Travelers Insurance Co. v. Chicago Bridge & Iron Co., 442 S.W.2d 888, 900 (Tex. Civ. App ¿Houston [1st Dist.] 1986, wit ref¿d n.r.e.) Further, the insured should be able to recover attorney fees for having to sue the carrier for breach of contract. Texas Civil Practice & Remedies Code §38.001, et seq. Texas United Insurance v. Burt Ford Enterprises, 703 S.W.2d 828, 835 (Tex. App. ¿ Tyler 1986, no writ).

B. The Duty to Indemnify

1. Duty to Pay Claims

An insurance carrier has a duty to pay up to the policy limits any covered claims made against the insurer. Unlike the duty to defend, the duty to indemnify is based upon facts proven and not on the allegations in the pleadings. The duty to indemnify only arises after it has been determined by judgment or settlement that the insured is legally responsible for the damages claimed. See Comsys Information Technology Services, Inc. v. Twin City Fire Insurance Company, 130 S.W.3d 181 (Tex. App. -Houston [14th District] 2003, no pet. h.).

2. Stowers Duty & Liability

Given the degree of control that the carrier has over the defense of the claims and the right to settle any covered claims made against the insured, the courts have long held that the insurance company has a duty to exercise ordinary care in determining whether to settle a claim for an amount within the policy limits. G.A. Stowers Furniture Co. v. American Indemnity Co., 15 S.W.2d 544 (Tex. 1929). Generally a Stowers settlement demand must propose to release the insured fully in exchange for a stated sum of money, but may substitute the policy limits for a sum certain. In order to trigger this duty (1) the claim made against the insured must be covered (2) the demand by the claimant must be for an amount within the policy limits, and (3) the terms of the demand must be such that an ordinarily prudent person would accept it. American Physicians Insurance Exchange v. Garcia, 876 S.W.2d 842, 848 (Tex. 1994). Texas Farmers Insurance Co. v. Soriano, 881 S.W.2d 312, 314 (Tex. 1994). If the insurance company is negligent in failing to tender the policy limits and the claimant obtains a judgment against the insured in excess of the policy limits, then the insured may be able to recover indemnity from the carrier for the full amount of the judgment, including any excess amounts over and above the liability policy limits. Further, in extreme cases the insurance carrier may have to pay punitive damages for its conduct.

3. Statutory Liability for Failing to Tender Policy Limits

The Texas Supreme Court has held that if the carrier negligently fails to settle a claim for the policy limits, it may be subjected to liability under Article 21.21 of the Insurance Code. Rocor International, Inc. v. National Union Fire Insurance Company of Pittsburgh, 77 S.W.3d 253, 260 (Tex. 2000). This is significant in that under this statute the insured may be entitled to recover statutory penalties and attorney fees, in addition to actual damages.

IV. Performance and Payment Bonds - Private Works Projects

A. Performance and Payment Bonds in General

A performance bond protects the owner of the improvements being constructed against losses arising out of the failure of a contractor to properly complete its work. Payment bonds protect subcontractors and materialmen against nonpayment for labor or material provided. The payment bond if properly issued in accordance with Chapter 53 of the property code also protects the owner's property against liens.

The insurance company that issues the bond is referred to as the surety. The relationship between the surety and its principal, the party that purchases the bond, is unique. In the event a claimant properly perfects its bond rights and the surety has to pay the claim, the surety is entitled to be reimbursed by its principal. Thus, the surety will carefully scrutinize a contractor's credit history, performance history and balance sheet in determining whether to underwrite a bond.

B. Making a Claim under the Performance Bond

In making a claim under the performance bond, the owner should have its attorney carefully review the terms of the bond to make sure the owner complies with all conditions of the bond. These bonds will typically have deadlines as to when a lawsuit must be filed.

C. Perfecting Rights under the Statutory Payment Bond

An original contractor who has a written contract with the owner may at any time furnish a bond for the benefit of claimants such as subcontractors and materialmen. If a valid bond is filed, a claimant may not file suit against the owner or the owner¿s property and the owner is relieved of obligations to withhold retainage or funds. Texas Property Code §53.201.

In order for the bond to be considered a valid property code bond the bond must meet the specific requirements of the property code. See Property Code §53.202. However, the property code states that a bond shall be construed to comply with the statute if it is furnished and filed in attempted compliance, or evidences by its terms intent to comply with the statute. Any provision in any payment bond furnished or filed in attempted compliance that expands or restricts the rights or liabilities provided under the statute shall be disregarded and the provisions of the statute shall be read into the bond. Texas Property Code §53.211. Thus, most bonds purchased by the original contractor with the intent that they be a statutory property code bond will be considered as complying with the property code, and a claimant will have to comply with the property code in perfecting a claim.

Any claimant that normally has a right to perfect a lien against the property for labor or material provided will typically have a right to enforce a cause of action under the payment bond. Texas Property Code §53.205. In order for a claimant to perfect its rights under the statute, the claimant may do so by taking all necessary steps in perfecting its lien rights (see chapter in seminar materials on mechanic¿s liens). Alternatively, the claimant can give to the original contractor all required notices and give to the surety instead of the owner all required statutory notices necessary to perfect lien rights. Texas Property Code §53.206.

If the claimant elects to perfect its claim under these alternative provisions, the claimant is not required to give notice to the surety of any contractual retainage agreement, unless the claimant has a direct contractual relationship with the original contractor and the agreed retainage is for more than ten per cent. Further, a claimant for payment of specially fabricated materials does not have to give to the surety notice of acceptance of an order for these materials . Lastly, the claimant does not have to file an affidavit with the county clerk giving notice of a lien. Texas Property Code §53.206 (b).

To be valid, the notices to the original contractor and surety must be timely. However, the content of the notices need only provide fair notice of the amount and the nature of the claim asserted. Texas Property Code §53.206 (c). Note, the notice to the surety does not have to have the fund trapping warning that normally must be given to the owner. Industrial Indemnity v. Zack Burkett, 677 S.W.2d at 493, 495 (Tex. 1984). For an example of a notice that can be used to give the surety notice of a claim for unpaid labor or materials, see Form No. 1 - Form for Alternative Notice under Property Code Payment Bond, Private Works at the end of the materials.

A claimant satisfies the alternative notice provisions relating to providing notice to the surety if the person mails the notice by certified or registered mail to the surety at the address stated on the bond or on an attachment to the bond; at the address on file with the Texas Department of Insurance; or at any other address allowed by law. Tex. Prop. Code §53.206 (d).

Example 1:

A subcontractor on a private works commercial job who has a direct contract with the general contractor has not been paid by the general contractor for work performed in March. There is a payment bond issued under the property code for the project. The subcontractor wants to take advantage of the alternative notice procedures of the property code. The subcontractor must send notice of its unpaid claim to the surety and general contractor by June 15, 2004, certified mail, return receipt requested (the fifteenth day of the third month from the time any of the labor or material was provided).

Example 2:

Same example as number one except the subcontractor does not have a direct contractual relationship with the general contractor. This subcontractor must send a notice of its unpaid claim to the general contractor by May 15, 2004, the 15th day of the second month from the time the labor was provided. This subcontractor must also send another notice to both the surety and the general contractor by June 15, 2004.

The claimant should also carefully review the terms of the bond and make sure to comply with them. This way if for some reason the bond does not comply with the property code, the claimant may still have perfected the right to pursue a common law action against the surety.

Under the property code, the claimant can sue the principal and surety on the bond either jointly or severally, if the claim remains unpaid for 60 days after the claimant perfects the claim. The claimant may sue for the amount of the claim and court costs and the suit must be brought in the county in which the improvements are located. If the bond is recorded at the time the lien is filed, the claimant must sue on the bond within one year following perfection of the claim. If the bond is not recorded at the time the lien is filed, the claimant must sue on the bond within two years following perfection of his claim. Texas Property Code §53.208. In those cases where no lien is filed and alternative notice is given it is unclear as to when the bond must be recorded in order to determine if a one or two year statute of limitations is applicable. A common sense approach would be to interpret the statue in such cases as meaning that the bond must recorded at the time the alternative notice is given. However, this is unclear. To be on the safe side, the claimant could just make sure to file the lawsuit within one year from the time the alternative notice is given.

V. Bond Claims - Texas Public Works

A. When Required

In Texas a general contractor entering into a public works contract with a governmental entity must provide a performance bond if the contract is in excess of $100,000 for the protection of the governmental entity and a payment bond if the contract is in excess of $25,000 for protection of the payment bond beneficiaries. Texas Government Code §2253.021.

B. Perfecting Rights under the Payment Bond

The payment bond protects any subcontractor or provider of material that has a direct contractual relationship with any general contractor or subcontractor. See Texas Government Code §§2253.001(9) and 2253.021(c)(1). To recover on a public works payment bond, a payment bond beneficiary must mail to the prime contractor (defined by §2253.001(3) as anyone that contracts directly with the governmental entity) and the surety written notice of the claim on or before the 15th day of the third month after each month in which any of the claimed labor was performed or material delivered. The notice must be accompanied by a sworn statement of account that states in substance that the amount of the claim is just and correct; and all just and lawful offsets, payments, and credits know to the affiant have been allowed. The sworn statement of account shall include the amount of any retainage applicable to the account that has not become due under the terms of the public work contract between the payment bond beneficiary and the prime contractor or between the payment bond beneficiary and a subcontractor. Texas Government Code 2253.041.

If the claim is being made under a written contract, the payment bond beneficiary has the option to enclose with the sworn statement of account, as the notice for a claim, a copy of the written agreement. Texas Government Code 2253.042. For a sample of a form that can be used by a claimant with a written contract see Form No. 2 - Notice of Bond Claim and Sworn Statement of Account, Public Works.

If the payment bond beneficiary does not have a written contract, the notice of the claim for unpaid bills must contain the name of the party for whom the labor was performed or material delivered, the approximate date of performance or delivery and a description of the public work labor or material, and the amount due. The payment bond beneficiary must generally itemize the claim and include with it copies of documents, invoices, or orders that reasonably identify the labor performed or material delivered, the job and the destination of delivery. Texas Government Code §2253.043.

There are additional rules that apply to claims for lump-sum payment for multiple items of labor or material, or for claims made under a written unit price agreement. Chapter 2253 should be consulted if any of these situations apply.

In the event a payment bond beneficiary has been paid everything except contractual retainage, an alternative form of notice can be given. The claimant can simply give written notice to the prime contractor and surety on or before the 90th day after the date of final completion of the public work contract containing the amount of the contract, any amount paid, and the outstanding balance. Tex. Government Code §2253.046. For an example of a form that can be used see Form No. 3 - Notice of Unpaid Retainage, Public Works.

In addition to the above, a payment bond beneficiary without a direct contractual relationship with the prime contractor must comply with additional notice requirements. If the payment bond beneficiary contracts with a subcontractor for retainage, the beneficiary must mail, on or before the 15th day of the second month after the date of the beginning of the deliver of material or performance of labor, written notice to the prime contractor that the contract provides for retainage and generally indicating the nature of the retainage. The payment bond beneficiary must mail to the prime contractor written notice of a claim for any unpaid labor or material before the 15th day of the second month after each month in which the labor was performed or material delivered. This can be accomplished by simply forwarding to the general contractor a copy of the statement sent to the subcontractor. In regard to specially fabricated material, the payment bond beneficiary must mail to the prime contractor by the 15th day of the second month written notice that the material has been received and accepted. Texas Government Code §2253.047.

Any and all notices required to be given must be sent by certified or registered mail. The notice to the prime contractor must be addressed to the prime contractor's residence or last know business address. Notices to the surety should be sent to the address stated on the bond, at the address on file with the Texas Department of Insurance or at any other address allowed by law. Texas Government Code §2253.048.

A payment bond beneficiary may sue the principal or surety, jointly or severally, on the payment bond if the claim is not paid before the 61st day after the date the notice for the claim is mailed. The suit may include claims for the amounts owed and reasonable attorney fees. Texas Government Code §2253.073. Suit must be filed in a county where any part of the public work is located. Texas Government Code §2253.077. Suit must be brought no later than one year from the date notice for a claim is mailed. Texas Government Code §2253.078(b).


This article is not attended to be a substitute for legal advice. If you have a legal problem, you should consult a lawyer.


APPENDIX

Form No. 1 - Form for Alternative Notice under Property Code Payment Bond, Private Works

DATE

Certified Mail/RRR - TYPE NUMBER OF RECEIPT

NAME AND ADDRESS OF SURETY

Re: My Client:
Job:

Dear Bond Department:

Please note that I have been retained by (NAME OF CLAIMANT) in regard to the above referenced job. Pursuant to the provisions of §53.206 of the Property Code and/or the terms of the enclosed payment bond, I am notifying you that my client has a claim against (NAME OF CONTRACTOR WITH WHOM CLAIMANT CONTRACTED) in the amount of $(AMOUNT OF CLAIM), for labor and materials furnished to (NAME OF CONTRACTOR WITH WHOM CLAIMANT CONTRACTED) to improve the property of (NAME OF OWNER). The type of labor and materials furnished by my client is (GENERAL DESCRIPTION OF WORK, I.E. ELECTRICAL WORK.) A copy of the following is enclosed:

1. Your Labor and Material Payment Bond;
2. Subcontract between my client and (NAME OF CONTRACTOR WITH WHOM CLAIMANT CONTRACTED); and
3. Invoice number _________ and corresponding (DATE) Subcontractor¿s Application for Payment.

My client's claim against (NAME OF CONTRACTOR WITH WHOM CLAIMANT CONTRACTED) in the amount of $__________ remains unpaid. If this amount is not paid within sixty days from the date of this letter, my client will have no choice but to consider taking other action against you and your principal(s). If you have any questions regarding this claim, please contact me at your earliest convenience. We look forward to the timely and amicable resolution of this matter.

Sincerely,

Dane Patrick


Enclosures

PC: Certified Mail/RRR ¿ No.
GENERAL CONTRACTOR
Certified Mail/RRR ¿ No.
OWNER
Via Fax No.
MY CLIENT

NOTE: The above Form No. 1 can be used to give notice to the surety instead of the owner, and to the general contractor alternative notice pursuant to Property Code §53.206. Thus, on a commercial construction project it must be sent to the surety and owner no later than the 15th day of the third month from the time that any of the labor or material was provided, and on a residential construction project no later than the 15th day of the second month from the time that any of the labor or material was provided. On commercial construction projects, additional notice must still be given to the general contractor no later than the 15th day of the second month from the time that any of the labor or material was provided.


Form No. 2 - Notice of Bond Claim and Sworn Statement of Account, Public Works
NOTICE OF CLAIM

Date: INSERT DATE

Certified Mail/RRR No. _________
TO: NAME AND ADDRESS OF SURETY

AND

Certified Mail/RRR No. ______________
NAME AND ADDRESS OF PRIME CONTRACTOR

Re: Project Description:

To each of the above:

We notify both of you that (NAME OF BOND CLAIMANT) has a claim in the sum of ($AMOUNT), for labor performed and/or materials delivered during the months of (MONTHS) 200__ and retainage on the above referenced project. The labor performed and/or materials furnished by (NAME OF CLAIMANT) are generally described as follows:
(GENERAL DESCRIPTION OF WORK, i.e. Electrical work.)

Such labor or materials were furnished to (NAME OF PARTY WITH WHOM CLAIMANT HAD THE CONTRACT) pursuant to the terms of a written contract, a copy of which is attached hereto. All work and materials have now been provided and (NAME OF CLAIMANT) has completed this contract in full.

The above amount being claimed includes contractual retainage in the amount of ($AMOUNT) which is now due.
OR
The above amount does not include contractual retainage. The amount of retainage applicable to the account that has not yet become due under the terms of the contract under which this claim is being made is ($AMOUNT).

Also, attached to this notice is a Sworn Statement of Account.

This notice is sent in compliance with Chapter 2253, Texas Government Code. If you need additional information to process this claim or if you believe that this claim is defective in any way, please notify us at once.

NAME OF CLAIMANT

By: _____________________________
REP. FOR CLAIMANT, TITLE


Enclosures: Subcontract, Sworn Statement of Account and attachments
Cc: Client
Certified Mail/RRR No. ______________________
NAME OF GOVT. ENTITY, I.E. CITY OF SAN ANTONIO
Attention: NAME OF REP., TITLE
ADDRESS


Sworn Statement of Account

State of Texas §
County of Bexar §

Before me, the undersigned authority, on this day personally appeared (NAME OF REPRESENTATIVE FOR CLAIMANT) who, after being by me duly sworn did depose and say:

1. My name is _________. I am the (POSITION, i.e. President) of (NAME OF CLAIMANT), a corporation, and am authorized to make this affidavit.
2. NAME OF CLAIMANT has a claim in the amount of ($AMOUNT OF CLAIM), for labor performed and/or materials delivered during the months of (MONTHS), 200__ for (NAME OF CONTRACTOR WITH WHOM CLAIMANT HAD A CONTRACT).
3. The amount of this claim is just and correct, and all just and lawful offsets, payments, and credits known to the undersigned claimant have been allowed.
4. The invoices or statements attached hereto are true and correct copies of the originals that were sent to (NAME OF CONTRACTOR WITH WHOM CLAIMANT HAD A CONTRACT). 
5. IF RETAINAGE IS NOT DUE ADD: The amount of retainage applicable to the account that has not yet become due under the terms of the contract under which this claim is being made is $(AMOUNT).

CLAIMANT

By: _________________________
NAME AND TITLE OF REPRESENTATIVE FOR CLAIMANT

Subscribed and sworn to before me this ____ day of _____________, 2004.

________________________
Notary Public in and for
The State of Texas

NOTE: The above Form No. 2 is for use by a claimant that has a written contract on a public works project. It must be given by the fifteenth day of the third month from the time any of the labor or material was provided. Duplicate originals should be sent to the surety and the prime contractor. Additional notices must be given to the general contractor by the 15th day of the second month from the time the labor or material was provided if the claimant did not have a direct contractual relationship with the general contractor. See Chapter 2253 of the Texas Government Code.


Form No. 3 - Notice of Unpaid Retainage, Public Works

Date: ________________

Certified Mail, Return Receipt No. ______________
TO: (Name and Address of Prime Contractor)

AND

Certified Mail, Return Receipt No. ______________
(Name and Address of Surety)

Re:

To each of the above:

Notice is hereby given that (NAME OF CLAIMANT) makes a claim for the retainage provided under the contract between (NAME OF CLAIMANT) and (NAME OF CONTRACTOR WITH WHOM CLAIMANT HAS A CONTRACT) on the above referenced project.

A copy of this contract is attached. The amount of the above-described contract (with changes) is $_________________.

The amount paid under the contract is $______. The outstanding balance owed to (NAME OF CLAIMANT) is $______________.

This notice is sent to you in compliance with Chapter 2253.046 of the Texas Government Code. If you need any additional information to process this claim or if you believe that this claim is defective in any way, please notify us at once.

Sincerely yours,

Name, Title

NOTE: This Form No. 3 can be used by a claimant whose claim is solely for retainage. Otherwise, use Form No. 2. The notice of unpaid retainage must be given on or before the 90th day after completion of the public work contract. Texas Government Code §2253.046.