Texas payment bonds are sureties taken out in the construction industry to ensure that contractors compensate their subcontractors, material suppliers, and laborers in a timely fashion. These bonds are usually obtained by contractors or subcontractors prior to the commencement of a construction project.
Payment bonds also ensure that payments comply with state and federal regulations. They offer legal recourse for subcontractors and suppliers. If a contractor has failed to pay subcontractors, suppliers and laborers can file a claim against the payment bond and be compensated accordingly.