A surety bond (pronounced “shoo-ruh-tee”) is a legally binding agreement involving three parties—the Principal, the Obligee, and the Surety. In this agreement, the Surety provides a financial guarantee to the Obligee if the Principal defaults on their obligations, such as not being able ...
In any business where a significant financial investment is made, a project or a transaction can carry a great amount of risk for the obligee. With a surety bond, risk is transferred from the obligee to the surety firm. This is why those in construction, insurance, and other inherently ri...
This party is calledthe obligeeof the bond. Often, the obligee is a legal entity, like a local government or governmental agency. They usually require surety bonds from local businesses or contractors. This protects them and their citizens from “bad behavior” of whoever has the bond. To th...
What is a construction bond? A construction bond provides a third-party guarantee (usually from a corporate surety) that the contractor will perform and complete the work according to the terms and conditions of the contract. A bond provides a guarantee to the project owner if the contractor do...
Most often, it's done by requiring the one hired to obtain a performance bond. For anyone seeking work in the construction industry, it's crucial to understand how this common type of surety bond works and why it is critical to your business. Viking Bond Service is here to break it ...
on a bond, the surety wants to recover its money from the buyer. Typically, a surety wants a buyer to have good credit or to have resources it can pursue through a lawsuit. As long as the surety is confident that it can recover its money, then it will likely sell an indemnity bond....
A bid bond is a type ofcontract bondtypically found in the construction industry with the function of holding contractors accountable for the bids they submit. In earlier times when bid bonds were less common, project developers would often award projects to contractors that had underbid their pro...
Is licensed and bonded the same thing? Construction or contractor bonds Also called license and permit bonds, this coverage indicates that a construction company or contractor has agreed to comply with the regulations of the government-issued building permit. This bond helps assure the client that ...
A surety bond involves three primary players: the financial guarantor or surety of a construction bond, guaranteeing the obligee that the contractor (called the principal) will act in accordance with the terms established by the bond. The obligeeis the owner of the project who hires the contrac...
What Is a Maintenance Bond? A maintenance bond is a type ofsurety bondpurchased by a contractor to protect the property owner or landowner from the costs to remedy a completed construction project's defects. Key Takeaways Maintenance bonds protect a contractor and property owner from financial lia...