4.3.4.1.3 License Bond Claims Procedures

• Jurisdiction: Arizona

A license bond surety may pay claims in the order of receipt, but is not required to do so. In the alternative, a license bond surety may require a claimant to reduce its claim to judgment. A claimant must bring a lawsuit against a license bond within 2 years following the commission of the act, delivery of the goods, or rendering of the services on which the claim is based. If fraud is involved, the 2-year limitation period begins to run from the date the claimant discovered or reasonably should have discovered the fraud as allowed under A.R.S. § 12-543(3).

The statute of limitations regarding a claim by a material supplier begins to run when the material supplier has the right to sue, that is, when the last item of material was furnished for which claim is made.^[22] However, if the claimant provides materials after the cancellation of the license bond, the statute of limitations begins to run on the date of the bond’s cancellation.^[23] The statute of limitations applicable to a claim by an owner of real property may begin to run upon the owner’s actual occupancy of the structure or upon his discovery of the breach of contract, whichever first occurs.^[24]

The total aggregate liability of the surety for all claims against a license bond, including attorneys’ fees, is limited to the amount of the bond. Although the bond may be exhausted in the order of judgments taken against the surety,^[25] the surety on a license bond may settle claims that are presented to it in writing...