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Lack of Performance Bond Leads to Trouble

Earlier this year a NH based general contractor ran into financial troubles.  As reported in the Rutland Herald,  the state of Vermont declared Baybutt in default Wednesday of its $2.6 million construction contract for renovation of the state office building in Brattleboro, VT.  This action made it possible Baybutt Construction’s surety company to come in and take over the stalled renovation.

Baybutt also had a contract for the renovation the Rockingham Free Public Library. Baybutt is the general contractor on the $2.9 million renovation.  But unlike the state of Vermont, Rockingham does not have a valid payment and performance bond, according to town officials. The town attorney, Stephen Ankuda of Springfield, said that Rockingham did not have a performance and payment bond from Baybutt, despite paying $21,000 for it earlier in the year. The lack of a payment and performance bond has left the town in an unenviable position, Ankuda said. The library is owned by the town.

Liens totaling $466,000 have been filed in connection with the library renovation project, and town officials said Baybutt Construction was paid for those bills, but did not pay contractors. Chances are, the city’s tax payers will be responsible for paying the sub contractors.  Most States have “baby Miller Acts” that require bonds on public construction as liens on public property are of not much use. Unlike private construction,  a lien on public property seldom can lead to the sale of that property to satisfy the lien.  Clearly the public entity dropped the ball and as a result, the town ends up with an unfinished building, unpaid subs, and a legal mess that will last for years.

Performance and Payment bonds would have avoided these issues.


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