2005 Illinois Code - Chapter 30 Finance 30 ILCS 550/ Public Construction Bond Act.
(30 ILCS 550/0.01) (from Ch. 29, par. 14.9)
Sec. 0.01.
Short title.
This Act may be cited as the
Public Construction Bond Act.
(Source: P.A. 86‑1324.)
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(30 ILCS 550/1) (from Ch. 29, par. 15)
Sec. 1.
Except as otherwise provided by this Act, all officials, boards,
commissions or agents of this State, or of
any political subdivision thereof in making contracts for public work of
any kind costing over $5,000 to be performed for the State, or a political
subdivision thereof
shall require every contractor for the work to furnish, supply and deliver
a bond to the State, or to the political subdivision thereof entering into
the contract, as the case may be, with good and sufficient sureties. The
amount of the bond shall be fixed by the officials, boards, commissions,
commissioners or agents, and the bond, among other conditions,
shall be
conditioned for the completion of the contract, for the payment of material
used in the work and for all labor performed in the work, whether by
subcontractor or otherwise.
If the contract is for emergency repairs as provided in the Illinois
Procurement
Code, proof of payment for all labor, materials, apparatus, fixtures, and
machinery may be
furnished in lieu of the bond required by this Section.
Each such bond is deemed to contain the following provisions whether
such provisions are inserted in such bond or not:
"The principal and sureties on this bond agree that all the
undertakings, covenants, terms, conditions and agreements of the contract
or contracts entered into between the principal and the State or any
political subdivision thereof will be performed and fulfilled and to pay
all persons, firms and corporations having contracts with the principal or
with subcontractors, all just claims due them under the provisions of such
contracts for labor performed or materials furnished in the performance of
the contract on account of which this bond is given, when such claims are
not satisfied out of the contract price of the contract on account of which
this bond is given, after final settlement between the officer, board,
commission or agent of the State or of any political subdivision thereof
and the principal has been made."
The surety bond required by this Section may be acquired from the
company, agent or broker of the contractor's choice. The bond and sureties
shall
be subject to the right of reasonable approval or disapproval, including
suspension, by the State or political subdivision thereof concerned. In the
case of State construction contracts, a contractor shall not be required to
post a cash bond or letter of credit in addition to or as a substitute for the
surety bond required by this Section.
When other than motor fuel tax funds, federal‑aid funds, or other
funds received from the State are used, a political subdivision may allow
the contractor to provide a non‑diminishing irrevocable bank letter of
credit, in lieu of the bond required by this Section, on contracts under
$100,000 to comply with the requirements of this Section. Any such bank
letter of credit shall contain all provisions required for bonds by this
Section.
(Source: P.A. 93‑221, eff. 1‑1‑04.)
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(30 ILCS 550/2) (from Ch. 29, par. 16)
Sec. 2.
Every person furnishing material or performing labor, either
as an individual or as a sub‑contractor for any contractor, with the
State, or a political subdivision thereof where bond or letter of
credit shall be executed as provided in this Act, shall have the right to
sue on such bond or letter of credit in the name of the State, or the
political subdivision thereof entering into such contract, as the case may
be, for his use and benefit, and in such suit the plaintiff shall file a
copy of such bond or letter of credit, certified by the party or parties in
whose charge such bond or letter of credit shall be, which copy shall,
unless execution thereof be denied under oath, be prima facie evidence of
the execution and delivery of the original; provided, however, that this
Act shall not be taken to in any way make the State, or the political
subdivision thereof entering into such contract, as the case
may be, liable to such sub‑contractor, materialman or laborer to any
greater extent than it was liable under the law as it stood before the
adoption of this Act. Provided, however, that any person having a claim
for labor, and material as aforesaid shall have no such right of action
unless he shall have filed a verified notice of said claim with the
officer, board, bureau or department awarding the contract, within 180
days after the date of the last item of work or the furnishing of the
last item of materials, and shall have furnished a copy of such verified
notice to the contractor within 10 days of the filing of the notice with
the agency awarding the contract.
The claim shall be verified and shall contain
(1) the name and address of the claimant; the business address of the
claimant within this State and if the claimant shall be a foreign
corporation having no place of business within the State, the notice
shall state the principal place of business of said corporation and in
the case of a partnership, the notice shall state the names and
residences of each of the partners; (2) the name of the contractor for
the government; (3) the name of the person, firm or corporation by whom
the claimant was employed or to whom he or it furnished materials; (4)
the amount of the claim; (5) a brief description of the public
improvement sufficient for identification.
No defect in the notice herein provided for shall deprive the
claimant of his right of action under this article unless it shall
affirmatively appear that such defect has prejudiced the rights of an
interested party asserting the same.
Provided, further, that no action shall be brought until the
expiration of 120 days after the date of the last item of work or the
furnishing of the last item of materials, except in cases where the final
settlement between the officer, board, bureau or department of municipal
corporation and the contractor shall have been made prior to the expiration
of the 120 day period, in which case action may be taken immediately
following such final settlement; nor shall any action of any kind be
brought later than 6 months after the acceptance by the State or political
subdivision thereof of the building project or work. Such action shall be
brought only in the circuit court of this State in the judicial circuit in
which the contract is to be performed.
The remedy provided in this Section is in addition to and independent of
any other rights and remedies provided at law or in equity. A waiver of rights
under the Mechanics Lien Act shall not constitute a waiver of rights under this
Section unless specifically stated in the waiver.
(Source: P.A. 93‑562, eff. 8‑20‑03.)
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(30 ILCS 550/3)
Sec. 3.
Builder or developer cash bond or other surety.
(a) A county or municipality may not require a cash bond, irrevocable
letter of credit, surety bond, or letter of commitment issued by a bank,
savings and loan association, surety, or insurance company from a builder or
developer to
guarantee completion of a project improvement when the builder or developer
has filed with the county or municipal clerk a
current, irrevocable letter of credit, surety bond, or letter of commitment
issued by a bank, savings and loan association, surety, or insurance company,
deemed good and sufficient by the county or
municipality accepting such security, in an amount equal
to or greater than 110% of the amount of the bid on each project improvement.
A builder or developer has the option to utilize a
cash bond, irrevocable letter of credit,
surety bond, or letter of commitment, issued by a bank, savings and loan
association, surety, or insurance company, deemed good and
sufficient
by the county or municipality, to
satisfy any cash bond requirement established by a county or municipality.
Except for a municipality or county with a population of 1,000,000 or more,
the county or municipality must approve and deem a surety or
insurance company good and sufficient for the purposes set forth in this
Section if the surety or insurance company is authorized by the
Illinois Department of Insurance to sell and issue sureties in the State of
Illinois.
(b) If a county or municipality receives a cash bond, irrevocable letter
of credit, or surety bond from a builder or
developer to
guarantee completion of a project improvement, the county or municipality shall
(i) register
the bond under
the address of the project and the construction permit number and (ii) give the
builder or developer a receipt for the bond. The county or municipality shall
establish and
maintain a separate account for all cash bonds received from builders and
developers to guarantee completion of a project improvement.
(c) The county or municipality shall refund a cash bond to a builder or
developer, or release the irrevocable letter of credit or surety bond,
within
60 days after the builder or developer notifies the county or municipality in
writing of the
completion of the project improvement for which the bond
was required.
For these purposes, "completion" means that the county or municipality has
determined
that the project improvement for which the bond was required is complete or a
licensed engineer or licensed architect has certified to the builder or
developer and the county or municipality that the project improvement has been
completed to the
applicable codes and ordinances.
The county or municipality shall pay interest to the builder or developer,
beginning 60 days
after the builder or developer notifies the county or municipality in writing
of the completion
of the
project improvement, on any bond not refunded to a builder or developer, at
the rate of 1%
per month.
(d) A home rule county or municipality may not require or maintain cash
bonds, irrevocable
letters of credit, surety bonds, or letters of commitment issued by a bank,
savings and loan association, surety, or insurance company
from builders
or developers in a manner inconsistent with this Section. This Section
supercedes and controls over other provisions of the Counties Code or
Illinois Municipal Code as they apply to and guarantee completion of a project
improvement that is required by the county or municipality, regardless of
whether the project improvement is a condition of annexation agreements.
This Section is a
denial and limitation under subsection (i) of Section
6 of Article VII of the Illinois Constitution on the concurrent exercise by a
home rule
county or municipality of powers and functions exercised by the State.
(Source: P.A. 92‑479, eff. 1‑1‑02.)
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