Why Are Bonds Required in Construction Projects?
Jacksonville, Florida, construction law firm Regan Atwood is a 2020 U.S. News & World Report Best Law Firm for its work in construction law.
Why Are Bonds Required in Construction Projects?
Regan Atwood handles performance bond claim disputes, and payment bond claim disputes that occur in construction projects in Florida. This post answers why are bonds required in construction projects?
Florida Law requires construction project contractors to be financially stable and licensed.
Additionally, prior to a government contract over $100,000 being awarded to a contractor, a contractor must post a performance bond and a payment bond.
What is a Payment Bond?
What is a payment bond? A payment bond guarantees that a contractor will pay all subcontractors, suppliers or laborers for work and materials provided under a project.
What is a Performance Bond?
What is a performance bond? A performance bond guarantees that a principal will fulfill contractual obligations in a project.
Bonds protect clients from contractors who fail to complete a job, fail to meet financial obligations for paying suppliers or subcontractors, or covering damage caused by workers to a property.
General contractors need payment and performance bonds to assure those leading a construction project, or who own a property, that payment will be made to all parties involved and contractual performance is ensured.
A bond claim may be filed by construction parties who want to recover payment from a delinquent prime contractor. Because there are extensive legal exceptions and complexities to bond claims, attorneys handle claims for all parties involved. Additionally, bond claims have strict filing guidelines, deadlines, and exact processes that must be followed.
What is the Miller Act?
The Florida Little Miller Act is a state-specific version of the federal Miller Act. Its main purpose is to protect subcontractors and material suppliers in government projects by requiring general contractors to furnish surety bonds to the government.
