What is a Surety Bond in Construction?
Jacksonville, Florida, construction law firm Regan Atwood handles surety bond disputes that arise from construction projects in Florida. Regan Atwood is a 2020 U.S. News & World Report Best Law Firm for its work in construction law.
What is a Surety Bond in Construction?
What is a surety bond in construction? Surety bonds are designed to:
- Assist a contractor if the contractor experiences cash flow problems
- Replace the contractor if a contractor abandons a job
- Guarantee a contractor’s contractual obligations to clients
- Ensure project completion within the terms of a construction project
State insurance departments regulate insurance policies and surety bonds. Surety companies are divisions or subs of insurance companies.
A surety prequalifies a contractor based on construction expertise and financial strength. The bond is underwritten with the least amount of loss.
Surety bonds are intended to ensure that construction projects are completed and that all parties are paid. But sometimes disputes arise among the vested parties.
Surety Bond Construction Law Cases since 2006
Regan Atwood provides the experience and legal knowledge required to assist sureties and other parties navigate surety claims and cases.
Privately Funded Projects
On privately funded projects, bonds create a smooth transition from construction financing to permanent financing and provide support to the contractor and ensure project completion.
Public Projects
On public projects, surety bonds provide payment protection for subcontractors, support the prequalification of contractors, and ensure contract completion protection for the public.
A surety bond is a three-party contract where the principal and the surety become obligated to the obligee for payment of a sum of money should the obligation set forth in the bond not be fulfilled by the principal party.
Usually, the surety bond is a promise by a surety or guarantor to pay one party, the obligee, a certain amount if a second party, or the principal, fails to meet an obligation, like fulfilling the terms of a contract.
