Every time there is some kind of disaster in a community, that leaves a trail of property destruction, you will find unscrupulous individuals knocking on doors offering to repair homes and businesses. They are generally strangers to the owners, and expect to be paid before any work is done. Public officials warn Seattle, Washington residents to avoid getting involved in what are almost always scams. Along with credibility and reliability, real professionals have contractor bonds Washington homeowners can verify.
A contract bond is not the same thing as insurance, although in some respects they resemble each other. Insurance transfers risk from an individual to a third party. It compensates the injured party in case of loss. A contract or construction bond is a form of surety. It guarantees a third party will pay the debts incurred by another and is designed to prevent loss. This contract bond is a three party agreement between the surety company, the client, and the individual doing the work.
The are several different contract agreements that cover different situations. The three issued most commonly are bid, performance, and payment. A bid bond ensures clients contractors will obtain performance and payment bonds if they are awarded the contract. The performance bond guarantees all work will be done as stipulated in the contract. The payment bond guarantees all suppliers and subcontractors used on the project will be paid in full.
Other types of agreements surety companies issue include site improvement, supply and maintenance. A subdivision bond is issued to guarantee contractors will build improvements within a subdivision according to local rules and regulations. These improvements can include streets, waste management systems, and sidewalks.
The Miller Act became law prior to the second world war. It stated that all contractors, who were awarded public works contracts, be required to have a payment and performance bond for any job that exceeded a hundred thousand dollars. Individual states have similar laws regarding public works contracts. These are generally referred to as Little Miller Acts.
In order to get a bond of any type, contractors must pass certain tests required by the surety company. They first must be members in good standing in the community, and they must have a reputation for paying their bills on time. Contractors must show they have the resources necessary to fulfill the contract requirements. Finally, they have to show fiscal responsibility and reliability.
When contractors default the surety company has only a few options. They can pay the client the amount of money they lost. The company can negotiate with the client to rebid the job in order to complete it. Sometimes they decide to give contractors the capital they need to complete the work, with the agreement that the funds will be repaid with interest once the job is finished.
Contractors who default, for whatever reason, have a very difficult time getting a bond from any other surety company. Before anyone has any construction done, they need to know what kind of bond contractors have in place.
A contract bond is not the same thing as insurance, although in some respects they resemble each other. Insurance transfers risk from an individual to a third party. It compensates the injured party in case of loss. A contract or construction bond is a form of surety. It guarantees a third party will pay the debts incurred by another and is designed to prevent loss. This contract bond is a three party agreement between the surety company, the client, and the individual doing the work.
The are several different contract agreements that cover different situations. The three issued most commonly are bid, performance, and payment. A bid bond ensures clients contractors will obtain performance and payment bonds if they are awarded the contract. The performance bond guarantees all work will be done as stipulated in the contract. The payment bond guarantees all suppliers and subcontractors used on the project will be paid in full.
Other types of agreements surety companies issue include site improvement, supply and maintenance. A subdivision bond is issued to guarantee contractors will build improvements within a subdivision according to local rules and regulations. These improvements can include streets, waste management systems, and sidewalks.
The Miller Act became law prior to the second world war. It stated that all contractors, who were awarded public works contracts, be required to have a payment and performance bond for any job that exceeded a hundred thousand dollars. Individual states have similar laws regarding public works contracts. These are generally referred to as Little Miller Acts.
In order to get a bond of any type, contractors must pass certain tests required by the surety company. They first must be members in good standing in the community, and they must have a reputation for paying their bills on time. Contractors must show they have the resources necessary to fulfill the contract requirements. Finally, they have to show fiscal responsibility and reliability.
When contractors default the surety company has only a few options. They can pay the client the amount of money they lost. The company can negotiate with the client to rebid the job in order to complete it. Sometimes they decide to give contractors the capital they need to complete the work, with the agreement that the funds will be repaid with interest once the job is finished.
Contractors who default, for whatever reason, have a very difficult time getting a bond from any other surety company. Before anyone has any construction done, they need to know what kind of bond contractors have in place.
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