How does a project owner get a surety bond?
First of all, keep in mind that there are three parties involved: the contractor, the project owner, and the surety company (which is much like an insurance company). Contract surety bonds come in three varieties: the payment bond, the performance bond, and the bid bond. Each one has its own place in the process, and can be obtained from an insurance agency that handles business insurance. The payment bond ensures that contractors will pay for the materials and workers they will need to complete the project. This protects the project owner from liens against the contractor that could interfere with use, refinancing, or sale of the property. The performance bond is financial protection for the project owner in case the contractor fails to carry out the terms of the contract or has significant delays. This bond is important to owners who will depend on tenants and property availability deadlines. The bid bond, which is usually the first step, ensures the owner that the contractor will pr
