![\"\"](\"https:\/\/bfbond.com\/blog\/wp-content\/uploads\/2017\/01\/Word-Cloud-300x129.png\")
<\/p>\n<\/p>\n
A type of contract surety bond that
\nensures a bidder for a supply or construction
\ncontract will enter into the contract within the
\nstipulated timeframe if the company wins the bid.
\nDefault results in the obligee (a government
\nagency, in this case) receiving the difference
\nbetween the amount of the principal\u2019s bid and
\nthe bid of the next low bidder or company
\nwho qualifies for the contract, or the amount
\nof the bond.<\/p>\n
A type of surety bond that
\ncan be required by state and local regulators in
\na wide variety of situations to protect consumers
\nand taxpayers. Some of the most significant for
\ngovernment policymakers include: license and
\npermit bonds, reclamation bonds, mortgage
\nbroker bonds and subdivision bonds.<\/p>\n
Surety bonds that involve
\nconstruction projects. In the event a contractor
\ndefaults, contract surety bonds ensure funds
\nare available to complete the contract and pay
\nsubcontractors, suppliers and laborers.<\/p>\n
A bond a business seeks to
\nprotect itself in the event of a loss incurred
\nbecause of employee dishonesty or misconduct.
\nSome states require these bonds for businesses,
\nsuch as title insurance companies and credit
\nunions, that do business with consumers.<\/p>\n
Statutes and
\nregulations require these bonds if a company
\nseeks to obtain a license or permit in a state
\nor local jurisdiction. If a principal violates its
\nobligations, this bond pays the obligee or
\nother third party.<\/p>\n
Law passed in 1935 that requires
\nperformance and payment bonds for federal
\nconstruction projects over a designated
\namount, currently for contracts over $150,000.<\/p>\n
A surety bond that
\nguarantees money transmission companies
\noffer services in compliance with state or local
\nstatutes and regulations.<\/p>\n
A type of commercial surety
\nrequired by a state or local regulatory agency
\nfor mortgage brokers to become licensed in
\nthat state.<\/p>\n
The entity that requires the bond
\nand is protected if there is a loss or default.<\/p>\n
A bond given by a contractor
\nto guarantee payment to subcontractors,
\nlaborers and suppliers for work performed
\nunder the contract.<\/p>\n
A bond that guarantees
\nperformance of the terms of a written contract.<\/p>\n
Required by a surety company
\nfrom the principal for the issuance of a bond.
\nPerformance and payment bonds come with
\na one-time premium that typically equals up
\nto 2 percent of the contract price.<\/p>\n
Also called \u201cobligor.\u201d This is the
\nparty who seeks the bond and is bound by the
\nunderlying obligation.
\nReclamation Bond: Required by a state
\nregulatory agency, such as the Department
\nof Environmental Quality, for a business that
\nseeks to mine or perform related activities on
\npublic lands. These bonds provide a financial
\nguarantee that the public lands mined will
\nbe restored.<\/p>\n
A bond that a general
\ncontractor may require of a subcontractor,
\nwhich guarantees the subcontractor will
\nperform work in accordance with the terms of
\nthe contract and will pay for certain labor and
\nmaterials under the contract.<\/p>\n
Developers must get this
\nbond from a surety if they plan to develop a
\nplot in a municipality to sell lots or homes.
\nLocal development authorities require
\nthese bonds, which guarantee a developer\u2019s
\nobligation that the project will adhere to state
\nand local statutes and regulations, before they
\nissue a development permit.<\/p>\n
Third party that issues the bond to the
\nprincipal and is responsible for fulfilling the
\nclaim in the event of a default or loss.<\/p>\n
A written agreement where a
\nsurety obligates itself to a second party, called
\nthe obligee, to answer for the default of the
\nprincipal. In the case of public works contracts,
\nthe obligee would be the state agency and the
\nprincipal would be the contractor.<\/p>\n","protected":false},"excerpt":{"rendered":"
Bid Bond: A type of contract surety bond that ensures a bidder for a supply or construction contract will enter into the contract within the stipulated timeframe if the company wins the bid. Default results in the obligee (a government agency, in this case) receiving the difference between the amount of the principal\u2019s bid and … Continue reading Glossary of Key Bond Terms<\/span>