Construction Contract Bonds
Construction Contract Bonds guarantee the performance of obligations under a contract. Because these bonds are often utilized by construction contractors, they are sometimes called Construction Surety Bonds or Contractor Bonds.
These bonds are used by owners to pre-qualify contractors submitting proposals on contracts. Bid bonds guarantee that a contractor will enter into a contract at the bid amount and post the appropriate performance bond, providing financial assurance that the bid has been submitted in good faith.
Construction performance bonds guarantee the contractor will faithfully perform the terms of the contract. This protects the owner from financial loss should the contractor fail to perform the contract in accordance with its terms and conditions.
These bonds guarantee payment of the contractor’s obligation under the contract for subcontractors, laborers, and material suppliers associated with the project, providing assurance that they will be paid if the contractor defaults. Since liens may not be placed on public jobs, the payment bond may be the only protection for those supplying labor or materials to a public job.
Maintenance Bonds for construction provide the upkeep of the project for a specified period of time after the project is completed and guarantees against defective workmanship or materials.
Subdivision Bonds are often required as a guarantee that mandatory public improvements will be successfully completed. Local authorities require the guarantee from the landowner because it obligates the principal and the surety to complete the subdivision improvements.