§ 38-26-108 — Substitution of bond allowed

Colorado § 38-26-108

• Jurisdiction: Colorado
• Title 38: Property -
• Art.: Contractor's Bonds and Lien on Funds

Text

(1) Whenever a verified statement
of a claim has been filed in accordance with section 38-26-107, the contractor
holding the contract against which such statement has been filed, or other person
who has an interest in the payments being withheld, by the contracting body that
awarded the contract may, at any time, file with the clerk of the district court of the
county where the contract is being performed or of the county where the office in
which the verified statement of claim is located an ex parte motion for approval of a
substitute corporate surety bond or any other undertaking that may be acceptable
to a judge of such district court.

(2) A corporate surety bond or undertaking filed pursuant to subsection (1) of
this section shall be in an amount equal to one and one-half times the amount of the
claim plus costs allowed by the court up to the date of such filing and shall have
been approved by an order of a judge of the district court in which such bond or
undertaking is filed. The order shall state that:

(a) The corporate surety bond or undertaking is approved;

(b) The verified statement of claim is discharged;

(c) The corporate surety bond or undertaking shall be substituted for the
moneys withheld pursuant to the verified statement of claim; and

(d) The contracting body that awarded the contract shall release the moneys
being withheld pursuant to the verified statement of claim on the same terms and
conditions as if the verified statement of claim had been released by the claimant.

(3) A corporate surety bond or undertaking filed pursuant to subsection (1) of
this section shall be conditioned that, if the claimant is finally adjudged to be
entitled to recover upon the claim upon which the claimant's verified statement of a
claim is based, the surety issuing the bond or undertaking or the principal
thereunder, shall pay to such claimant the amount of the judgment issued upon
such claim, together with any interest, costs, and other amounts awarded by the
judgment.

(4) Notwithstanding the provisions of section 38-26-107, upon the issuance
of an order from a judge of the district court approving a bond or undertaking filed
pursuant to subsection (1) of this section, the clerk of such district court shall issue
a certificate of release, which shall be served on the board, officer, person, or other
contracting body by whom the contract was awarded by certified mail, return
receipt requested, or by personal delivery. The certificate of release shall show that
such claim against the contract has been discharged and released in full and the
corporate surety bond or undertaking has been substituted. After the certificate of
release is filed, payments to the contractor by the contracting body by whom the
contract was awarded shall resume in accordance with the terms of the contract,
and any funds previously withheld as a result of the filing of the verified statement
shall be released to the contractor pursuant to the terms of the contract or, if not
specified in the contract, within thirty days after the receipt of the certificate of
release by the board, officer, person, or other contracting body by whom the
contract was awarded.

(5) When a corporate surety bond or undertaking is substituted for a claim as
provided in this section, the claimant who filed the verified statement of a claim
pursuant to section 38-26-107 (1) may bring an action against such bond or
undertaking. Such action shall be commenced within the time allowed for the
commencement of an action set forth in section 38-26-107 (3).

(6) In the event that no action is commenced upon the corporate surety bond
or undertaking within the time period called for by section 38-26-107, the corporate
surety bond or undertaking shall be discharged and shall be returned to the
contractor.

Legislative History

Source: L. 2000: Entire section added, p. 68, � 1, effective March 10.