Surety Bonds

The bid is submitted with your proposal. It assures the owner of the project that you will enter into a contract and provide the owner with performance and payment bonds if you are the lowest bidder & awarded the job.

guarantees that you will pay any subcontractors and suppliers you’ve contracted with for this particular project.

It should also be noted that this three-party arrangement may also apply to a sub-contractor /general contractor relationship, where the sub-contract provides the GC with bid/performance/payment bonds if required, and the guarantee is the same as above.

Construction is a volatile business, and relationships provide the owner with options (see above)if things go wrong on a job. Also, by providing a surety bond, you tell the owner that a surety company has reviewed your construction business fundamentals and has decided that you are qualified to offer a specific job. Bonding is a credit-based product, meaning the surety company will examine the financial underpinnings of your company.

What Is a Court Bond?

“Court bond” is an umbrella term for the different types of surety bonds required in certain court proceedings. Broadly defined, court bonds act as security for payments or obligations. Many types of surety bonds are usually referred to as court bonds, owing to their connection with court cases. Common examples of probate court bonds are administrator, executor, guardianship in which an individual has been placed in charge of a person’s assets or estate. In other words, this type of court bond ensures that a party fulfills its court-ordered duty to act, for example, ethically and legally as a court-appointed guardian.

Who needs to obtain such bonds?

A court bond may be required from various individuals in various cases, all connected to litigation before the court. Anyone entrusted to take care of another person’s property or finances may be forced to post a fiduciary bond via a probate court. It guarantees the caretaker will not take advantage of their position and faithfully perform their duties according to the requirements of the court. A person wishing to appeal a judgment before a higher court must post an appeal bond before the appeal is made. The relationship is needed to prevent misuse of the appellate system through insubstantial motions, and to guarantee that the appellant will follow the initial court decision.

Commercial bonds

Commercial bonds are typically purchased in compliance with state licensing and permit regulations by companies or working professionals. These bonds are relatively easy to apply for, as insurance companies usually see as low risk. It’s important to remember that commercial relationships are not linked to legal disputes, construction projects, or other contract work. If you are looking for bond information for contract projects, please see our Contract Bond Guide.