An owner can use a payment bond to avoid lien provisions on qualifying construction-related contracts, but the bond and contract must be recorded and meet stated form, surety, and indexing requirements.
33-1003 - Payment bond in lieu of lien right; bond purposes and conditions; recording 33-1003 . Payment bond in lieu of lien right; bond purposes and conditions; recording A. Every owner of land, including any person who has a legal or equitable interest in the land, who enters a contract requiring any person to perform labor or professional services or to furnish materials, machinery, fixtures or tools in the construction, alteration or repair of any building or other structure or improvement on such land, may avoid the lien provisions of section 33-981 pertaining to agents by requiring the person with whom the owner contracts to furnish a payment bond. On recordation of the payment bond together with a copy of such contract in the office of the county recorder, in the county in which the land is located, no lien shall thereafter be allowed or recorded by the person claiming a lien against the land on which the labor or professional services are performed or the materials, machinery, fixtures or tools furnished, as provided in this article, except by the person who contracts, in writing, directly with the owner. B. A payment bond furnished pursuant to subsection A of this section shall be in the amount and form prescribed by title 34, chapter 2, article 2. The contract recorded with the bond shall contain a legal description of the land on which the work is being or is to be performed. C. The bond provided for in this section shall be executed solely by one or more surety companies holding a certificate of authority to transact surety business in this state issued by the director of the department of insurance and financial institutions pursuant to title 20, chapter 2, article 1 and shall be accompanied by a power of attorney disclosing the authority of the person executing the same on behalf of the surety. Notwithstanding any other statute, the bond shall not be executed by an individual surety or sureties, even if the requirements of section 7-101 are satisfied. D. The county recorder of the county in which the bond and contract are recorded shall index the bond and contract under the index classification in which mechanics' and materialmen's liens are recorded.