A surety bond is a binding agreement that involves three parties; the principal (the entity executing the contract), the obligee (the person for whom the service is performed), and the surety (the party that underwriting the contract). The agreement protects the obligee from loss as a result of the principal’s failure to execute his responsibility. There are two types of bonds; commercial and contract surety bonds. People looking for a local bonding agency should note that commercial bonds are easier to obtain as they only need a signed application and an updated financial statement. Contract bonds, on the other hand, are commonly used in large construction companies where public entities are involved.
SURETY BOND COMPANIES NEAR ME
Surety bonds are mandatory requirements for bidding for both private and public construction projects, hence often referred to as construction bonds. It is a three-party agreement between the obligee, the surety, and the contractor to guarantee payment and performance of the contract. As such, project owners can make claims where the contractor is in breach of his contractual obligations. Unlike commercial bonds, contract bonds are riskier and demand more detailed underwriting information. Clients looking for bonding solutions should get acquainted with the common types of contract bonds:
Payment bonds - They are signed to guarantee payment of certain subcontractors, material suppliers, and laborers where the contractor defaults payment and prevent workers from filing a mechanics liens on the project.
Bid Bonds – It is a guarantee that the construction bid has been submitted in good faith, the contractor intends to execute the contract at the price bid, and he will provide the necessary payment and performance.
Performance bonds – It protects the owner from financial losses where the bonded contractor fails to perform the contract according to the predetermined terms and conditions.
Maintenance – A client looking for a bond should sign up for a contract to obtain a guarantee for construction for a particular period. Whether the building is an extension to an existing structure or a newly-built project, the contract reimburses victims from illegal or inferior work.
More types of Sureties
Supply Bond - It is a guarantee that the supplier will provide the necessary materials to execute a contract between the purchaser and the supplier. Our bond programs ensure that you are reimbursed where the supplier defaults.
Commercial bonds – Commercial bonds respond to federal statutes and regulations and are part of licensing requirements for companies or individuals. Their primary goal is to protect consumers against misrepresentation, fraud, and provide compensation for monetary losses.
Administrator Bond – Also referred to as an administration bond, it is posted on behalf of an administrator of an estate to ensure that he conducts his duties legally and according to the provisions stated in the will. It protects the benefactors against fraud and covers financial losses caused by improper or illegal execution of the will by the administrator.
Auction Bond - It protects the customer by ensuring the valuables being auctioned are represented well and avoid illegal or unethical behavior during the transaction. An auctioneer looking for a bond can visit our site to sign up for an auction bond before entering into any contract.
It protects the public from auctioneer fraud, misrepresentation, false advertising, or mishandling of possession, and allows clients to file claims where the seller has acted in breach of his duties or caused financial damage. Clients should perform the required credit checks and other screening processes before getting bonded.
Appraiser Bond – This form of insurance guarantees compliance with the laws and regulations regarding appraisal transactions. In a home buying contract, for example, it assures the purchaser that the appraiser will conduct an honest assessment and not over or undervalue the property. In an already weak housing market, looking for a bonding company close to me that provides appraisal bonds has become invaluable before buying a home.
Broker – The term comprises various several other broker bonds like the freight broker bonds. The bond protects clients from illegal or unethical behaviors of a broker that may cause financial loss. Like the auctioneer bond, agents need to go through a credit check before purchasing the bond, have the application approved, as well as other screening processes. At NFP (Surety), our experts will guide you through each step to ensure a hassle-free application, approval, and purchase of broker bond.
Court Bond – It’s an umbrella term for an executor, probate, estate, and other kinds of bonds for clients looking for a bonding co. near me. They protect participants of legal proceedings against fraudulent activities and misappropriation of funds.
Contractor License bond – The bond is a legal requirement by most states to ensure a general contractor operates his business in compliance with the regulations of the contractor’s license. It protects the public from fraud by the contractor. Note that contractor license sureties differ from performance and bid bonds as they ensure compliance with the local or state’s contractors’ license. Performance and bid bonds, on the other hand, are contract bonds that ensure execution of the responsibilities of a contract.
Credit Services bond – Credit service organizations operate by helping clients obtain credit payment extensions or improve credit ratings at a fee. They help avoid or delay foreclosure of mortgages or other collateral-based agreements. The bond is ideal for companies or individuals providing such services to protect customers from fraudulent actions that cause financial losses.
Fidelity bond – The bond is created to manage long-term relationships, such as between an employee and an employer to protect him from stealing, fraud, and other illegal actions. It enforces honest dealings by employees to prevent damage or theft. During employee-employer disputes, the bond may require the union to pay all costs that result from damage or dishonesty committed by the employee.
Real Estate Closing Agent – It guarantees that properties handed to a broker or agent during a real estate transaction are accounted for and handled appropriately. This also ensures that real estate agents perform their responsibilities in compliance with the rules of license in that state. It is an agreement between three parties, the principal (broker), the bonding co. and the obligee (the state or individual who requires the bond).
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