Texas Performance BondGovernment Code Chapter 2253
Every Texas public works contract over $100,000 requires a performance bond equal to 100% of the contract value. That's the headline. What most contractors miss are the two lower payment bond thresholds -- $25,000 for state agencies and $50,000 for municipalities -- that trigger bonding obligations on far smaller projects. Government Code Chapter 2253, Texas's “Little Miller Act,” governs all three. Understanding which threshold applies to your project determines whether you need a performance bond, a payment bond, or both.
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Three Thresholds, Not One: How Chapter 2253 Actually Works
Most guides cite the $100,000 performance bond threshold and stop there. But Chapter 2253 contains a three-tier system that catches contractors off guard. The performance bond threshold is the highest. Payment bonds kick in much earlier -- and the cutoff depends on whether the governmental entity is a municipality.
Section 2253.021(a)(1) requires a performance bond on any public work contract exceeding $100,000. Section 2253.021(b)(1) requires a payment bond on non-municipal contracts exceeding $25,000. Section 2253.021(b)(2) raises that threshold to $50,000 for municipalities. Each bond must equal 100% of the contract price. A $40,000 contract with a state agency needs a payment bond but no performance bond. A $40,000 contract with a city needs neither. A $150,000 contract with either needs both. The distinction matters for bond pricing -- a single payment bond costs less than a combined performance and payment package.
Texas Public Project Bond Thresholds Under Chapter 2253
Contract value determines which bonds are required
| Bond Type | Threshold | Governmental Entity | Bond Amount | Statute |
|---|---|---|---|---|
| Performance Bond | > $100,000 | All public entities | 100% of contract | 2253.021(a)(1) |
| Payment Bond | > $25,000 | Non-municipal (state, county, school, etc.) | 100% of contract | 2253.021(b)(1) |
| Payment Bond | > $50,000 | Municipalities (cities, towns) | 100% of contract | 2253.021(b)(2) |
County contracts over $50,000 may also require bonds under Local Government Code Section 262.032
Texas Government Code Chapter 2253
$40K State Agency Contract
$40K City Contract
$150K Any Public Entity
Payment Bond Claim Deadlines: The Timeline That Protects -- or Bars -- Your Claim
Chapter 2253 imposes strict notice and filing deadlines on subcontractors and suppliers seeking payment under a public project payment bond. Miss a single deadline and your claim is permanently barred -- regardless of how valid it is.
Written Notice
Send written notice to the prime contractor by the 15th day of the third month after each month in which labor was performed or materials delivered. This is a rolling deadline -- each month of work creates a new notice window.
Retainage Claims
For retainage held by the governmental entity, the notice deadline extends to 90 days after final completion of the contract. This is a separate window from monthly claim notices.
Waiting Period
After properly giving notice, you must wait at least 61 days before filing a lawsuit. This mandatory cooling-off period gives the contractor and surety time to investigate and pay. Filing suit too early is grounds for dismissal.
Statute of Limitations
The lawsuit must be filed within one year from the date notice is mailed. After one year, the right to sue on the payment bond is extinguished. Consult an attorney regarding potential tolling.
Critical for subcontractors: These deadlines are jurisdictional, not procedural. Texas courts have consistently held that failure to comply with Section 2253.041 notice requirements bars the claim entirely. Keep certified mail receipts as proof of timely notice. If you're a prime contractor, understand that your surety bond obligates you to provide bond copies and surety contact information to subcontractors under Section 2253.024.
Public Projects vs. Private Projects: Two Different Bonding Frameworks
Texas law draws a hard line between public and private construction bonding. The statutes, filing procedures, claim processes, and enforcement mechanisms differ completely.
Public Projects (Chapter 2253)
- Bonding is mandatory above statutory thresholds
- Bond filed with the contracting governmental entity
- Surety must hold U.S. Treasury certificate of authority
- Claim deadlines set by statute (not negotiable)
- No individual sureties -- corporate sureties only
- Public entity cannot specify which surety to use
Private Projects (Property Code Ch. 53)
- Bonding is voluntary -- at the owner's discretion
- Bond recorded in county real property records
- Surety qualification governed by contract terms
- Claim deadlines set by bond language (negotiable)
- Replaces mechanic's lien rights when properly recorded
- Lender-required on most financed commercial projects
Not sure which framework applies? If the project owner is a governmental body -- state agency, county, city, school district, special district -- it's Chapter 2253. Everything else falls under Property Code Chapter 53 and your contract. Learn more about the difference between bonds and insurance.
What a Texas Performance Bond Costs
Your premium is a percentage of the contract value -- not a flat fee. On a $500,000 public works contract, a contractor with strong credit and financials might pay $5,000 to $15,000 annually. The same bond for a newer contractor with limited history could run $25,000 to $50,000. The spread is wide because underwriters weigh multiple factors simultaneously.
Credit score drives the baseline rate, but it's not the only factor. Surety companies also evaluate your company's financial statements (working capital, net worth, debt ratios), years in business, largest project completed, backlog, and the specific project's scope and timeline. A contractor with a 720 credit score but weak balance sheet may pay more than one with a 680 score and strong working capital. For a detailed breakdown of pricing factors, see our surety bond cost guide.
Performance and payment bonds are typically written together at a combined rate. Requesting both on the same project is standard practice and more cost-effective than securing them separately.
Texas Performance Bond Cost by Credit Score
Based on a $500,000 contract bond amount
- Excellent (750+)Rate: 1-2%$5,000-$10,000
- Good (680-749)Rate: 2-3%$10,000-$15,000
- Fair (620-679)Rate: 3-5%$15,000-$25,000
- Below 620Rate: 5-10%$25,000-$50,000
Rates shown for combined performance + payment bond on a $500K contract. Actual pricing depends on financial statements, experience, and project scope.
Official Texas Requirements
"A governmental entity that makes a public work contract with a prime contractor shall require the prime contractor, before beginning the work, to execute to the governmental entity a performance bond if the contract is in excess of $100,000."Texas Legislature • Texas Government Code Section 2253.021(a)
Texas vs. Federal: Which Bonding Law Applies to Your Project?
Texas has its own bonding statute separate from the federal Miller Act. The law that governs depends on who is paying for the project, not where it is physically located.
Texas Chapter 2253 vs. Federal Miller Act
Side-by-side comparison of bonding requirements
| Requirement | Texas (Chapter 2253) | Federal (Miller Act) |
|---|---|---|
| Performance bond threshold | > $100,000 | > $150,000 |
| Payment bond threshold | > $25,000 (non-municipal) / > $50,000 (municipal) | > $150,000 |
| Bond amount | 100% of contract value | 100% of contract value |
| Surety qualification | U.S. Treasury cert + TX-admitted | U.S. Treasury cert (Circular 570) |
| Individual sureties | Not recognized | Allowed with restrictions |
| Claim notice deadline | 15th of 3rd month after work | 90 days after last work |
| Lawsuit filing window | 61 days - 1 year after claim | 90 days - 1 year after last work |
| Anti-specification | Yes (cannot require specific surety) | Yes |
Federal projects in Texas follow the Miller Act regardless of project location
40 U.S.C. Sections 3131-3134 and Texas Government Code Chapter 2253
Working on federal projects in Texas? See our bid bonds page for federal bid bond requirements, which also differ from state thresholds.
Surety Qualification and Prime Contractor Obligations
Texas imposes specific requirements on both the surety company writing the bond and the prime contractor who procures it.
Surety Requirements
- Must hold a current U.S. Treasury certificate of authority for bonds exceeding $100,000
- Individual sureties are not recognized under Texas law -- corporate sureties only
- If bond exceeds 10% of surety's capital and surplus, excess must be reinsured with a Texas-admitted reinsurer
- TDI maintains a list of approximately 40 authorized surety companies
- Public entity cannot require a contractor to use a specific surety company (anti-specification rule)
Prime Contractor Duties (Section 2253.024)
- Provide the name and address of the contracting governmental entity to all subcontractors
- Furnish copies of the performance and payment bonds to any claimant who requests them
- Disclose the surety company's name and TDI toll-free telephone number
- Execute bonds before beginning work -- not after contract signing
- Failure to comply with disclosure duties exposes the prime to direct liability
Do You Need a License Bond or a Performance Bond?
In many states, contractors carry two surety bonds: a license bond (ongoing, required to hold a license) and performance bonds (project-specific, required per contract). Texas collapses this. There is no statewide general contractor license bond in Texas. TDLR regulates specialty trades like electricians and plumbers primarily through insurance requirements, not surety bonds.
Individual cities may require a contractor registration bond -- typically $5,000 to $25,000 -- by municipal ordinance. Houston, Dallas, San Antonio, and Austin each have their own requirements. But at the state level, a performance bond on a specific project is often the only surety bond a Texas general contractor carries.
If you hold a specialty trade license regulated by TDLR, check the requirements for your specific trade at the Texas contractor license bond page. For a full walkthrough of the bonding process, see our guide to getting a surety bond.
Quick Decision: Which Bond Do You Need?
County Contracts: The Optional Bond Rule Under Local Government Code
Beyond Chapter 2253, Texas Local Government Code Section 262.032 gives counties separate authority over bonding. For contracts exceeding $50,000, a county may -- but is not required to -- demand a performance bond. The word “may” matters. Chapter 2253 uses “shall.”
In practice, most Texas counties do require bonds on contracts over $50,000, but the enforcement varies. Some counties set their own bonding thresholds higher or lower within their purchasing policies. A contractor bidding county work should read the county's invitation for bids carefully -- the bond requirement will be stated there, not assumed from the statute.
When a county does require a bond, it typically follows the same 100% of contract value standard as Chapter 2253, and the surety must still be Treasury-certified. The county bond operates alongside -- not instead of -- any Chapter 2253 obligations that may apply.
Chapter 2253 Bonding Questions Contractors Ask
Answers grounded in Government Code Chapter 2253, Property Code Chapter 53, and TDI regulations
What is the difference between the $25,000, $50,000, and $100,000 bond thresholds in Texas?
Texas Government Code Chapter 2253 sets three separate thresholds. Performance bonds are required on public contracts exceeding $100,000. Payment bonds have two thresholds: contracts over $25,000 for non-municipal governmental entities, and contracts over $50,000 for municipalities. These thresholds apply independently. A $75,000 public school contract, for example, requires a payment bond but not a performance bond. All three bond types must equal 100% of the contract value when triggered. Visit buysuretybonds.com/what-is-a-surety-bond/ for a primer on how surety bonds work.
How does a subcontractor file a payment bond claim in Texas?
A subcontractor or supplier who is not paid on a bonded Texas public project must send written notice to the prime contractor by the 15th day of the third month after each month in which the labor or materials were provided (Government Code Section 2253.041). For retainage claims, the deadline extends to 90 days after the date of final completion (Section 2253.046). After notice is properly given, the claimant must wait at least 61 days before filing suit (Section 2253.073). The lawsuit must be filed within one year from the date notice is mailed under Section 2253.078. Missing any of these deadlines can permanently bar recovery.
Do I need a performance bond for a private construction project in Texas?
Private project owners in Texas are not required by state law to demand performance bonds, but many do -- especially on commercial, industrial, and institutional projects. When a private owner does require bonding, the bond is governed by contract terms and Property Code Chapter 53 rather than Government Code Chapter 2253. A key difference: private project bonds are recorded in real property records in the county where the project is located, whereas public project bonds are filed with the contracting governmental entity. Lenders financing private construction almost always require performance and payment bonds to protect their collateral.
What surety companies are authorized to write performance bonds in Texas?
For public contracts over $100,000, the surety must hold a current certificate of authority from the U.S. Department of the Treasury (the Treasury List, also called Circular 570). Texas law prohibits individual sureties -- only corporate sureties qualify. The Texas Department of Insurance (TDI) maintains a list of approximately 40 authorized surety companies licensed to write bonds in Texas. If the bond amount exceeds the surety's single-bond Treasury limit, the surety must reinsure the excess with a reinsurer admitted in Texas. Public entities cannot specify which surety company a contractor must use under Section 2253.021.
Does Texas require a statewide general contractor license bond?
No. Texas does not have a statewide general contractor license. The Texas Department of Licensing and Regulation (TDLR) regulates certain specialty trades -- electricians, plumbers, HVAC technicians -- primarily through insurance requirements rather than surety bonds. Individual cities may require contractor registration bonds (typically $5,000 to $25,000) by municipal ordinance, but there is no state-level license bond for general contractors. This means a performance bond on a specific project is often the only surety bond a Texas general contractor carries. For trade-specific requirements, see buysuretybonds.com/contractor-license-bonds/texas/.
How do Texas performance bond thresholds compare to federal Miller Act requirements?
The federal Miller Act requires performance and payment bonds on all federal contracts exceeding $150,000 -- a higher threshold than Texas's $100,000 for performance bonds. However, Texas's payment bond threshold is significantly lower: $25,000 for non-municipal entities versus the federal $150,000. Both Texas and federal law require bonds equal to 100% of the contract value. For federal projects physically located in Texas, the Miller Act governs -- not Chapter 2253. A contractor working on both state-funded and federally funded Texas projects needs to understand both frameworks.
New to construction bonding? Our learning center covers the fundamentals of surety bonds, bond costs, and how to get bonded. Already bonded in other states? Browse performance bond requirements by state.
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All content is researched from official state and federal sources (.gov) and verified before publication. BuySuretyBonds.com works with Treasury-certified, A- minimum rated surety carriers serving all 50 states.
The Bond Is the Easy Part of a Texas Public Works Bid
Between estimating, plan review, subcontractor qualification, and bid preparation, winning a Texas public project takes weeks of work. Your performance bond shouldn't be a bottleneck. Get approved today so your bonding capacity is confirmed before the bid deadline.
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