REAL ESTATE & CONSTRUCTION
PRIVATE CLIENT PRACTICE
A surety bond is a form of assurance where one party promises to pay a specific amount to another party if the latter fails to fulfill their contractual obligations. This bond serves as protection against potential losses incurred due to the failure to meet those obligations. Surety bonds are commonly used in various industries, such as construction, real estate, finance, and professional services.
At T Hudsons Advisors, our team of surety professionals has cultivated robust connections with brokers and companies involved in the bonding process. We possess the expertise to handle all facets of surety bonding, including commercial, subdivision, contract, and construction surety. We can facilitate the entire process effectively.
The surety bond known as a contract or corporate surety bond offers financial security and construction assurance for building and construction projects. Its purpose is to provide reassurance to the project owner (obligee) that the contractor (principal) will fulfill their contractual obligations, including compensating subcontractors, laborers, and material suppliers as specified in the contract. Here are the different types of contract surety bonds:
Bid bonds: These bonds provide financial assurance that the contractor has submitted a bid in good faith and intends to enter into the contract at the proposed price. They also ensure that the contractor will provide the required performance and payment bonds.
Performance bonds: These bonds safeguard the owner from financial losses in case the contractor fails to perform the contract according to the terms and conditions outlined in the agreement.
Payment bonds: Payment bonds guarantee that the contractor will make payments to subcontractors, laborers, and material suppliers involved in the project as per their contractual obligations.
Maintenance bonds: Maintenance bonds offer a guarantee against any defective workmanship or materials for a specified period after the completion of the project.
Subdivision bonds: Subdivision bonds provide assurances to cities, counties, or states that the principal (contractor) will finance and construct specific improvements, such as streets, sidewalks, curbs, gutters, sewers, and drainage systems.
These various types of contract surety bonds serve to protect the interests of the obligee and ensure the successful completion of construction projects while upholding financial obligations to subcontractors and suppliers.
Commercial surety bonds serve as a guarantee for the principal’s performance of specific obligations or undertakings outlined in the bond. Here are the different types of commercial surety bonds:
License and permit bonds: These bonds are mandated by state laws or local regulations and are necessary to obtain a license or permit for engaging in a particular business. Examples include bonds required for contractors, motor vehicle dealers, securities dealers, employment agencies, health spas, grain warehouses, liquor sales tax, etc.
Judicial and probate bonds (fiduciary bonds): These bonds ensure the proper performance of fiduciaries’ duties and compliance with court orders. They are applicable to administrators, executors, guardians, trustees of a will, liquidators, receivers, and masters. Judicial proceedings court bonds encompass injunction, appeal, indemnity to sheriff, mechanic’s lien, attachment, replevin, and admiralty bonds.
Public official bonds: Public official bonds provide a guarantee for the faithful performance of duties by a public official. They are commonly required for treasurers, tax collectors, sheriffs, judges, court clerks, and notaries.
Federal (non-contract) bonds: These bonds are mandated by the federal government and are applicable to various entities. Examples include bonds required for Medicare and Medicaid providers, customs, immigrants, excise, and alcoholic beverages.
Miscellaneous bonds: This category encompasses a range of bonds that serve different purposes. It includes bonds for lost securities, lease agreements, guaranteeing payment of utility bills, ensuring employer contributions for union fringe benefits, and providing workers’ compensation for self-insured entities.
These commercial surety bonds offer protection, compliance, and financial security in various business and legal contexts, ensuring that obligations are fulfilled and duties are performed as required.