Labor and Material Payment Bonds
Labor and Material payment bonds insure that those who perform services, (laborers and subcontractors), or provide materials at the construction site will be paid. Since mechanic's liens cannot be placed against public property, the payment bond may be the only protection these claimants have if they are not paid for the goods and services they provided to the project. As a broad generality, on private work, the labor and material payment bond guarantees the owner that the contractor will deliver a lien-free project.
The specific coverage provided by labor and material payment bonds varies depending on whether the project is federal, state, or private. On federal projects, the bond guarantees payment under the terms of the Miller act. On local projects, state laws and regulations determine the obligations and extent of payment guarantees. In Texas, Government Code, Chapter 2253 applies to Public Work while private work falls under the Property Code, Chapter 53.