Bond - Probate to Construction
What are Surety Bonds?
There are many types of bonds. They essentially are an agreement between three parties.
Principal – Person or Entity needing the bond
Obligee – Party requiring the bond
Surety – Insurance Company proving the bond
The Surety pays the Obligee damages, penalties or other costs up to the bond limit when the Principal does not perfom acording to the requirements for the bond. The Principal then repays the Surety. Therefore as a Principal you sign a general agreement of indemnity as part of the bond application which makes you responsible to pay all expenses back to the Surety.
The application process for bonds typically requires a credit check on the Principal. Contractor performance bonds typically require review of Principals financials. Most bonds upon receiving all the necessary applications and supporting documents can be issued in one or two days.
What are the typical types of bonds?
Probate (Executor or trustee) Bond – Protects estate if the executor fails to act properly. See Probate Application for additional information. Typical cost 1% – 3% of the bond amount per year.
Motor Vehicle Bond – Car dealer bond required to sell vehicles by the state. Typical cost $250 per year
Real Estate Broker Bond – Required to hold Real Estate Brokers license. Typical cost $50 or less
ERISA Bond – Required for business retirement plans
Contractor type bonds
- Bid Bond – Assures that the bid has been submitted in good faith
- Perfomance Bond – Protects the owner should contractor fail to perform the contract
- Payment Bond – Assures the contractor will pay specified subcontractors, laborers & suppliers
- License or Permit Bond – Guarantees that the party seeking the license or permit will comply with applicable laws or regulation