Fort Lauderdale businesses which are relatively new to commercial construction projects may be aware that surety bonds are used for these types of projects but may not understand all the steps of the process fully.
For those who have a valid construction claim, such as a subcontractor which was not paid or an investor dealing with a serious construction defect, a surety bond can be a way of recovering compensation quickly.
Basically, the surety bond company, oftentimes an insurance company, agrees to pay these sorts of claims if the responsible party fails to do so. The bond will usually have a maximum dollar amount that the company will pay.
In some cases, the bond company may also agree to figure out how to fix the issue or, if the project was left undone, arrange to complete the construction.
There are a variety of types of bonds related to construction
Exactly what type of bond a Florida business might want to request in any kind of agreement depends on the situation.
For example, a developer soliciting bids for a new project will probably want bid bonds from those who submit proposals.
These bonds are there to cover losses in case a contractor submits a proposal but then backs out before signing a contract.
Performance bonds, which often are issued together with payment bonds, provide protection in case a contractor, or subcontractor, fails to finish a construction job as promised or does inadequate work.
Among other things, payment bonds assure that a contractor will pay its subcontractors or protect the developer from mechanic’s liens or other claims.
Finally, maintenance bonds provide protection for defects discovered after the project is complete.
No matter the type, issues involving surety bonds can be legally complicated. Someone with questions or concerns should consider speaking with a construction law professional.