Committee approves cleanup of payment and performance bond law to reduce loopholes

Senator Kim Hammer introduced a bill with David Grace, an attorney experienced in construction and surety law, to simplify and standardize Arkansas law governing payment and performance bonds. Grace said current law contains conflicting statute-of-limitations provisions and lacks a clear performance-bond statute; the bill would set a one-year limitation for payment-bond claims, a two-year limitation for performance-bond claims measured from cessation of work or final payment, require filing payment bonds with the circuit clerk, and create a 90-day notice condition for some claimants modeled on the federal Miller Act.

Supporters said the changes reduce traps for unwary contractors and suppliers, make bond information more discoverable and provide clearer enforcement rules. Committee members asked whether the rules applied to public versus private works and charities; sponsors clarified that public-bond requirements remain and private bonds remain optional, but if a bond exists it would be governed by the statute. The committee passed the bill by voice vote.