bookmark_borderHow Can I Purchase a Performance Bond in Texas?

performance bond - In Texas, how do I obtain a performance bond

In Texas, how do I obtain a performance bond?

An employer in a Texas state court suit must obtain a performance bond if the employer does not have a written employment agreement with an employee. The bond is an insurance policy that protects the employer from financial loss when it is issued by its former employees for payment of wages under the Fair Labor Standards Act,  Title 29 of United States Code section 201 et seq., and similar state laws regulating minimum wage and overtime payments to employees.

Contract workers and independent contractors must obtain a performance bond if their contract requires it: It is recommended that Fiduciaries obtain Performance Bonds from principals who have been asked to engage in fiduciary activities which might include the investment of funds for others into real estate or other investments.

In Texas, where can I receive a performance bond?

Performance bonds provide assurance to your client that you will complete the work you were hired for. Without them, your client could ask for a refund of its money if you do not fulfill the contractual obligations. The Performance Bond Act of 1983 requires contractors and subcontractors on public works projects in Texas to execute their performance and payment bond within 60 days after notice from the owner to proceed with work. Bonds must be filed in Austin and submitted in duplicate originals to:

Bureau of Administration, PO Box 1270, Capitol Station, Austin TX 78711-1270, Phone: (512) 463-9362.

Submit two original copies along with one copy for your contract documents. Any change in ownership or location requires written notice to the commissioner.

In Texas, how much does a performance bond cost?

A performance bond is a type of contract in which one party agrees to be responsible for the debt or obligation of another. Performance bonds refer to many types of contracts depending on the industry and type of price quote, but most often make reference to public work projects such as road construction and excavation. They are also known as contractor’s payment bonds, supply bonds, labor, and material payment bonds, progress payment guarantees, etc.

Currently, private contractors are required by the state of Texas to procure performance bonds if they’re bidding for any public works project valued at more than $25000. The amount varies depending on the value range for different types of projects: 

  • For Projects under $100000 – 100% of the contract price 
  • Between $100001 and $500000 – The base amount of 100% of contract price plus an additional 1% 
  • Between $500001 and $1000000 – The base amount of 100% of contract price plus an additional 2% 
  • For Projects over $1000000 – The base amount of 100% of contract price plus 5%. 

However, there is a cap on maximum coverage which is around 2.5million. In other words, the maximum bond amount can be up to 150 thousand dollars. In this case, 5% coverage will have to be divided into two parts: 3%: The base minimum percentage that covers bidding or proposal security, or 10 percent if required by the awarding authority. 2%: The additional percentage needed for contract performance. 

Is there a need for a performance bond in Texas?

In Texas, an owner may contract with a general contractor for the construction of improvements and require performance bonds from either the contractor or subcontractor. The bond amounts will vary depending on the nature and location of work to be performed by the parties involved in the project. 

For personal property work (not involving real estate) up to $100,000, for example, there is no requirement that you purchase a performance bond prior to commencing work. If you choose not to acquire such a bond and fail to complete the contractual obligations you could be held personally liable for any costs incurred by your client in completing the contracted tasks. 

This liability would extend well into the future and could devastate your business if it were applied widely enough. You may also incur personal liability if you actually complete the work and fail to get paid.

On the other hand, if you are going to be working on a job that is for more than $100,000 in value or involves the construction of a building on someone else’s property (real estate), then a performance bond may be required by an owner/client prior to commencing work. 

The purpose behind requiring this bond is so that one party (the owner) can be assured that there will be someone responsible to complete any contracted tasks on time without having to assume any additional risk associated with not paying installments under the contract. In some cases, an owner may require more than one type of surety bond from several contractor parties involved with a project.

In Texas, who issues a performance bond?

In Texas, a contractor’s license bond is known as a performance bond. A performance bond is required by the State of Texas to ensure that a contractor performs any work for which they have been hired. Performance bonds are only issued when the value of the contract exceeds $4500.

Performance Bonds can be purchased from any surety company licensed in Texas and will secure all contracts up to $500,000. Bonds must be purchased prior to submitting your application or you will need to wait until your application has been processed before purchasing one.

Performance bonds are purchased with what is called an annual aggregate limit. This means that if there are multiple contracts under the same license number on file with TDLR, these contracts combined cannot exceed $500,000 worth of work. 

If you begin contracting on another project before your current projects are completed, the amount of the performance bond does not change until your current contracts are complete (or you terminate them). Then, when you start your next contract, the new contract must be for at least $4500 to require a performance bond.

To know more about performance bonds, check out Alpha Surety Bonds now!

bookmark_borderAre Performance Bonds Secured?

performance bond - Is it safe to get a performance bond

Is it safe to get a performance bond?

When starting any new business venture it is important to do your research. If you are thinking about hiring someone else to act as a guarantor for your business or project finance then this article should give you some food for thought. It’s also worth bearing in mind that any contract drawn up to ask another person to act as ‘surety’ for your business carries some degree of risk.

Let’s first take a look at what a performance bond is and how it works. A performance bond – also known as a contract bond – is an arrangement where one party asks another to guarantee that a contract will be honored. If the contractor defaults, then the guarantor has to make good on their promise by repaying any monies due or refunding any payments made by the contractor’s customer if costs exceed those originally stated in the contract. 

An individual, known as the principal, wants to secure a project by asking another party to provide a guarantee via a performance bond. In return for giving this guarantee, usually an insurance company or bank, the guarantor charges the principal for this service. 

They may also charge interest on money drawn down from them or fees for administration and management work they carry out during the period in which they are funding your business operations in accordance with their contract with you. If you go ahead and put in place a performance bond then there is no going back – if you want to cancel it at some point then both parties have to agree that canceling is best suited to all concerned.

Are performance bonds secured?

Generally speaking, yes performance bonds are secured by the project (since it is the reason for providing this bond in the first place). The exception would be if there were an override in the language in your agreement with the contractor where they agreed to provide you with a letter of credit instead of a performance bond. 

This would waive their requirement to secure the bond with the project itself. However, even in that case, I would still recommend requiring them to provide either a letter of credit or bank guarantee since both financial instruments also act as insurance against non-performance from the contractor.

Will I get my money back if the performance bond is not used?

If your contract with us is canceled, or if we cancel the contract in writing, except for our negligence or willful misconduct, you will receive an immediate refund of all payments made within thirty days after cancellation. 

However, if the bond is used by either party at any time during this period to keep one or more subcontractors on site to complete their contracted portions of the work then no refunds are allowed for that portion of funds held which were allocated against those subcontractors. This applies whether your contract with us directly or through one of our subcontractors is canceled by you or us, except for our negligence or willful misconduct.

According to this excerpt of contract language, if the contractor uses the Performance Bond during any part of your project period, there may be no refund issued. This means that even if you cancel the contract early, you do not receive a partial refund based on the percentage of work completed. Although this excerpt does not mention time limits for bond use; it can be inferred that bond usage is limited in time because bonds usually cover only short periods.

What happens when a company drops my performance bond?

In case you’ve been living under a rock, the current security landscape is not great. It’s been bad for a good while and it seems to be getting worse. One of the biggest challenges we face as infosec folks is that we’re easily replaced: just one hiring freeze later and we’re gone. We become expendable employees within organizations that will toss us aside at a moment’s notice if they think we’ll cost them money or provide even the slightest hint of inconvenience.

One such payment is known as a performance bond. These bonds are required in many government contracts. They can also show up in commercial agreements, but they’re less common there. Remarkably, many organizations fail to make these required payments to infosec contractors—and even when we catch it and point it out to them, they still refuse to pay.

Is a performance bond a type of security?

A performance bond is a type of security. It is an insurance policy taken out by the contractor, guaranteeing that they will perform the contract to the satisfaction of their client. The fee for this guarantee can be up to 10% of the total value of the contract. A performance bond ensures that if you do not complete or deliver all items required, your company or organization still receives its full fee.

The following are types of securities:

  • Stock in a corporation
  • A bond issued by a government entity
  • Options on securities
  • A convertible promissory note issued by a start-up
  • Future contracts used to hedge commodity prices

To know more about performance bonds, check out Alpha Surety Bonds now!

bookmark_borderConstruction Bonds 101: How Bonds Work And Why They Matter For Getting Paid

performance bond - How does a contractor’s bond work - buildings

How does a contractor’s bond work?

Bonds protect both property owners and contractors. A contractor’s bond is a guarantee that the person performing the job will do it at his agreed-upon price, on schedule, and to code. If the contractor fails to meet any of those requirements, you file a claim with your bonding company and they negotiate compensation for you.

You can issue a contractor’s bond on your own. It is not terribly expensive, given the fees are usually only 1-5% of your total contract on completed jobs. However, hiring a surety agent will speed up the bonding process and help you find good candidates for contracts under $25,000 or less. You pay more in fees if you don’t hire an agent but save time on the application process.

Who pays for bonds in construction?

It’s an important discussion since it impacts how teamwork works on a job site. If one side isn’t willing or able to follow through on responsibilities, then projects run into trouble. Let’s take a closer look under the hood of construction projects by answering some questions related to this topic.

When you hire someone to do work on your home, you want to know that they will be trustworthy and do good work. That’s why contractors often require a performance bond that assures the owner their work will be done as contracted.

The performance bond is paid for by the contractor and it usually protects the owner against financial loss due to faulty workmanship or materials. The bond can be issued by an insurance company, which essentially acts as a surety, or it can come from another business assuming responsibility for the actions of another (i.e., one trade subcontractor guaranteeing the payments and work performance of another).

What is a payment bond in construction?

A payment bond is a contract by which one party secures another party’s performance of their undertaking to the owner for a particular class of project. In certain cases, regardless of fault or negligence by either party, there may be a statutory right to recover from a third party. 

A payment or labor and materials bond provides security for the faithful performance of a contractor’s obligation to pay all subcontractors and material suppliers for labor and material furnished in connection with the project. 

Performance bonds provide security for the faithful performance of every kind of obligation arising out of the construction contract that can be performed without causing work stoppage or delay in completion, such as the obligation to complete the entire work according to plans and specifications.

In simple terms, a payment bond is a document in which a contractor pledges to pay a subcontractor or supplier for services or materials. The contract ensures the client that the general contractor has undertaken to indemnify them from these claims.

How do you get a construction bond?

A construction bond is a document that secures the owner of a property from any default by contractors.  This document enables an owner to get help from courts if the contractor defaults on the payment or does not perform his obligations.

This document is required in most states for all construction projects that cost more than $500. It ensures the owner’s protection and minimizes disputes between the contractor and owners.

The bond is issued by a surety company after it finds out that the contractor and owner agree on the terms and conditions of their contract. These companies charge a percentage of the amount covered by the bond, which varies from state to state. The cost of the premium is charged when the contractor files for this bond, but when they renew it every year, there will be no additional charges except for additional costs or taxes imposed by the surety company.

What does the contractor bond amount mean?

A construction bond is a surety bond required by an owner or person funding the project if any governmental permits are involved in the acquisition of the permit. A contractor is normally the obligee in this type of contract and must meet with compliance to put up a performance bond with a bonding agency that can be used for any purpose at hand. Once it has been decided that a contractor will release funds with an individual contracting, then there are certain requirements through which one must go through with extreme urgency. 

1) Identify your needs/permits 

2) Determine who will contribute to the cost of coverage 

3) Review all bids/quotes for the appropriate bond amount 

4) Request appropriate bond form from prospective bidders/offerors 

5) Request bond from prospective bidder/offeror (including the application and other required documents) 

6) Review and sign a bond 

7) Return signed bond to the contractor prior to the release of funds

8) If the contract is terminated or not completed, notify your bonding company immediately. Failure to comply with this step may result in a claim being denied and/or penalty for late notification. 

To know more about surety bonds, visit Alpha Surety Bonds now!

bookmark_borderHow Liens And Bonds Work Together To Protect Contractor Payments

performance bond - What is the relationship between a payment bond and a lien - skyscrapers

What is the relationship between a payment bond and a lien?

A payment bond guarantees that employees of a contractor or subcontractor will be paid according to the terms of contracts between those parties and that the rights of all claimants will be protected. A lien is an encumbrance on property that has been placed as security for the repayment of a debt.

It is important to understand how these two concepts relate to one another. 

Contractors and subcontractors typically agree with general contractors to perform particular work in exchange for payment from the general contractor. Payment bonds protect both parties by requiring project owners or contracting agencies to compensate workers and suppliers if the general contractor fails to do so after promising payment and receiving performance security (i.e., a down-payment). 

The compensation provided under such bonds generally includes amounts withheld from pay, plus interest and penalties. A payment bond also ensures that any material or subcontractors who supply labor or services to the project are paid by the general contractor for their work.

What is the difference between a claim and a lien?

Claim and lien are used interchangeably in different contexts. However, there are distinct differences between these two words. The main difference between claim and lien is that claim refers to any account presented by someone to another for payment or satisfaction while lien refers to an encumbrance on land, usually by the security interest. 

This means that a claim is a summarization of the client’s case against an opposing party while a lien is a legal encumbrance on real property, providing notice to all that there exists a liability that might affect the title to or possession of the land.

The difference between a claim and a lien can also be explained by examining the etymology of these two words. Both claim and lien have their roots in Old French from Latin through Old English. The word “claim” originally meant “to appropriate wrongfully,” “hold as one’s own,” or “call upon another for help.” 

The word comes from Middle English came derived from Old French claim which was in turn derived from Late Latin clamare meaning ‘shout.’ Another theory suggests that the word comes from Latin clamor meaning ‘outcry’. The spelling of the claim changed to its current form around the mid-17th century.

What does having a lien mean?

A lien is a legal claim against someone’s property by a creditor and can take the form of either an encumbrance or a charge.

When someone has an encumbrance, it means that they have put a hold on the real estate until some financial obligation is met. If the debt is not satisfied, then their right to keep possession of the property may be forfeit. 

The other type of lien that can exist is known as a charge, and this would cause the property to no longer be free and clear if payment cannot be made to satisfy both claims simultaneously. What you should understand about each situation is that if someone makes such claims and they go unpaid up-front, then those people could potentially foreclose on the property entirely if necessary.

How do payment bonds work in construction projects?

The payment bond is a written contract required by construction contracts and is supplied as a guarantee on the part of the contractor. It requires that they will pay all subcontractors and suppliers who work on the project; within a certain number of days after receiving their final payment from the owner or developer. It also guarantees that the contractor will complete the project to building code, specifications, and requirements, as outlined in the original contract. 

A payment bond is used to cover any costs that may be incurred by subcontractors, suppliers, laborers, and workers. Because claims are made against the contractor within a certain number of days after being paid, short-term payment bonds are used for small construction projects or where the risk of having large numbers of subcontractors involved in the project is great. Longer-term payment bonds are required for larger construction projects with fewer sub-contractors involved.

The amount of coverage provided by a payment bond will vary according to the dollar value of the contract, but most require that 100% of all claims be met up to the full amount on file at any time during construction. The total final amount due must be stated in an attachment added to this form.

What is a lien in construction?

Lien is a term used in construction projects to describe the right of people or companies to retain possession of assets until payments are received for the project. The person or company with this legal right is commonly referred to as a lienor. When the lien is removed, the title transfers back to the owner (see also recording).

The lienholder who retains possession can be paid by liquidating the assets without further recourse against the property owner. If so, he loses his rights under the law and this may harm his bargaining position when negotiating payment on other matters related to the project. On some occasions after an agreed-upon sum has been paid, lien holders may choose not to remove their liens at all, since they have only agreed to accept partial payment.

To know more about surety bonds, visit Alpha Surety Bonds now!

bookmark_borderHow To Best Position Yourself For The Lowest Surety Bond Cost

performance bond - How do you negotiate a surety bond - office stuff

How do you negotiate a surety bond?

Negotiating a surety bond is not unlike any other negotiation you face in your life. You need to figure out how much you can get, what options are available, where to shop for the best price, and finally, what will fit your needs best.

The first thing that should be done is find an agent or broker that “knows the ropes”. This process could take 1-2 weeks just because of the volume of work they have to backtrack through. They need to know if there are any other bonds on file with another company. If so, these companies will have certain rights when it comes time to market your band. Also found during this research stage is how many years the business has been in service as well as what type of industry it operates under.

What determines the amount of a surety bond?

Surety companies will base the amount of your surety bond based on several factors. These might include:

The industry to which you are applying. There may be a minimum bond requirement for this industry set by law or standards set by the company. Your personal credit history may also affect your bond requirements. If you have poor credit, the company could increase your required bond amount or not even write a policy at all with you as the principal to be insured. 

The individual project for which you are requesting coverage could trigger higher levels of bonding if it is unusually large in nature, requires specialized work that might pose additional liability risks, or poses other unknown risks that would require an increased level of financial commitment from the insurer.

How much should my surety bond be?

The amount of the bond required is based on the insurance requirement if any. If there is no insurance requirement, then it would be $100 per license issued or renewed; if there is an insurance requirement (which can vary), then it would be 10% of annual gross revenue.

For example, if you have one agent making sure that he or she has the correct license number before sending out their clients is an important part of keeping your business running smoothly. Some states require Bonds. A surety bond is a 3rd party guarantee that may be required by the state licensing agency or regulator to provide financial protection for consumers who have been harmed by licensed professionals in the course of their being helped by them.

Depending on your state, they may require either a license bond or an indemnity bond. A license bond covers an individual agent who has been licensed by the state to solicit insurance business for your company. 

It guarantees that if the agent takes off with the money without delivering any policies (and it’s not because he/she died), then you will get paid back through the company that wrote the policy. An indemnity bond provides protection against losses due to physical damage or property claims brought by third parties as a direct result of services performed. but does not include professional errors and omissions liability.

How do I make my own surety bond?

You may need to purchase a bond, also known as security or indemnity if you are responsible for protecting another person’s belongings.

A surety bond is backed by your creditworthiness and allows the bonding agency to guarantee that your responsibilities will be fulfilled. For example, you might purchase this type of insurance when you become a cosigner on someone else’s loan. The borrower would not be able to meet their financial obligations without this guarantee.

Every surety company has its own qualifying criteria, so it is important to work with one who offers the best fit for your needs. Here are some common types of bonds:

  • Fidelity Bonds (Insurance) 
  • Public Officials Bonds (Insurance)
  • License and Permit Bonds 
  • Court Bonds (Bail)
  • Real Estate Bonds (Insurance) 

As you can see, there are many different types of bonds available for various situations and circumstances. You can find online resources to help you locate agencies that can provide surety bonds. You may need to answer some questions about yourself, your business, and the responsibilities associated with the type of bond you are seeking before receiving an estimate of the cost.

Are surety bonds paid annually?

A Surety bond is an agreement between three parties: the principal, the obligee, and the surety. The purpose of a surety bond is to ensure that contractual duties are fulfilled. 

The application process takes time which could require up to six months for it to be approved and effective by your intended customer, depending on how large their business is and what type of contract you’re applying for. 

Therefore you wouldn’t want to start this process before being 100% certain that your customer will agree to hire you as a contractor or subcontractor. Applicants should not spend any money on a surety bond before they have been awarded a contract, their financing has been finalized, and they know exactly when they are going to start the project. 

To know more about surety bonds, visit Alpha Surety Bonds now!

bookmark_borderWhat Can You Do With An Expiring Surety Bond?

surety bond - When should I renew my surety bond - tall glass buildings

When should I renew my surety bond?

A surety bond is a contract between a guarantor and a contractor involving the performance of work or service. An agreed monetary value of that service is put up as collateral against possible errors or omissions made by the contractor during the course of their services. 

However, if a contractor has been issued a performance bond but does not put up collateral only a fidelity bond is issued. The fidelity bonds guarantee their behavior as, means three to five years, with an initial period of 12 months and renewals every year thereafter. A renewal reminder will be sent by the surety company six months prior to expiration so you have enough time to decide whether or not the bond should be renewed. If ignored, your bond expires automatically after one year.

Renewing your worker’s compensation bond early ensures that your business stays compliant with all state regulations as required by law—resulting in a low risk of being canceled or placed under “conditional” status by your insurer. Compliance includes timely payment of premiums, maintaining required financial resources, completing paperwork correctly, and remaining drug-free within the company.

Do you get your money back from a surety bond?

One of the three most common bonds that a business owner has to take out is a surety bond. This type of bond is a pledge or promise to fulfill a mandated obligation, and the two types of bond are commercial bonds and contract bonds. 

A commercial bond can be required by several different agencies, which require you to have either an environmental impairment or worker’s compensation insurance policy if you want to sell goods on government property. If you don’t have this kind of coverage, then you would need to purchase a surety bond from your insurance provider. 

In many cases, when people refer to an insurance agent “giving them money back for their surety bond,” it is actually an insurance company giving them a refund on premiums they paid for their bond, not money they would get back if the bond was canceled. If you cancel your surety bond early, then you would forfeit all of your premium payments and wouldn’t get any money back. 

Do surety bonds expire?

A surety bond does not expire. The intent of a surety bond is to remain in effect for the life of the contract, which was initially negotiated when the owner and contractor selected a subcontractor to work on-site. If you are still employed by your current employer and working under that contract or agreement, then your surety bond remains active and valid.

If you have left that job and taken another position with a new company, then you may need to take out a new bond depending upon how long ago it has been since you were last bonded. Sometimes an employer will allow employees to keep the same coverage after they leave, so check with yours before taking out another policy. 

So if you are still working under the same contract for the same employer, your bond will stay in effect until it is nullified by one of three things happening: 1) The expiration date on the bond passes without renewal; 2) You are fired or otherwise leave your job, or 3) Your surety company cancels your policy for defaulting on payments.

What happens when your bond expires?

If you’re like most people, you probably forgot to pay the monthly premium and missed a few payments. However, it’s not always that simple: Some bonds can remain valid for as long as 20 years! Many people are unaware of these longer durations; typically they only think about when their driver’s license or passport expires. But what about those other licenses? Are the licenses still good even though the person could have moved out of state 10 years ago? The answer is yes – but there is a catch.

There’s no denying that we live in a digital world; every document and identification number has been assigned an expiration date and must be renewed. Unfortunately, most people tend to forget about this process and the items become invalid sooner than expected. Since we live in such a fast-paced world, all of these expiration dates tend to blend together, making it difficult to keep track of them all.      

What does it mean to renew a surety bond?

The term of a surety bond can vary depending on its type; it could be one year, five years, or more. Also, some bonds require payment of one full premium upfront while others may only require monthly installments. In most cases, however, there are no refunds once a premium has been paid so it’s important to understand what you are getting into before making a purchase. 

There are also situations where an individual or business might have a bond that is no longer active or has been discharged, and they would like to purchase a new one instead of getting rid of the old one. In this case, the purchaser must first make sure the original bond is paid off before applying for a new one.

To know more about surety bonds, visit Alpha Surety Bonds now!

bookmark_borderHow Can A New Business Get A Surety Bond?

surety bond - How do I set up a surety bond - work mode

How do I set up a surety bond?

A surety bond is a written promise to pay the full face value of a contract should one of the parties default. A typical example would be a bonding company that guarantees that contractors will complete jobs. Surety bonds vary in scope and complexity, but all take on some level of risk to compensate for the inadequacies of any single party involved in an enterprise. 

It is common for financial institutions such as banks and insurers to require customers or policyholders to arrange for surety bonds before giving them money or entering into business transactions with them, such as loan agreements or insurance contracts.

The first step in getting bonded is selecting a surety company. The going rate for a bond is determined by supply and demand, the size and nature of the job, and the creditworthiness of the contract’s principals. In general, a contractor will be able to secure a more competitive rate by taking on a larger project or one that involves greater risk for the surety company.

What type of business needs surety bonds?

A surety bond is an agreement between three parties where there are two obligations. One party or the “obligee” requires another party to fulfill an obligation like keeping a contract with them. The other party, or the “principal,” agrees to this obligation and puts up money called the “bond.” The third party, or the “surety,” acts as a guarantor for that principal by promising to pay any losses incurred by not fulfilling their side of the contract.

Businesses sometimes need different types of surety bonds depending on their line of work. For example, retailers often need fidelity bonds or performance bonds to use suppliers properly. A contractor might require payment bonds so they can pay from clients when completing projects.

Though many people that have never had to get a surety bond have heard of them, they are still an often misunderstood financial product. Here is what you need to know about surety bonds.

What is a surety bond for a business?

It generally costs a pretty penny to become bonded since businesses know that there is a lot at stake when taking on a task. Bonds are an extra expense to the company, but they can help your business in so many ways. It protects you from mistakes that could cost your business money or, worse yet, result in a lawsuit. 

The costs will vary depending on what type of bond is necessary for your business activities, and businesses will need to be bonded if there is a loss due to fraud, embezzlement, theft, misappropriation of funds, or property damage not covered by insurance.

Getting bonded is pretty simple; businesses should always check with their attorney before taking out any sort of surety bond since sometimes specific bonds are required to cover certain types of activity. Once it has been determined which bond is appropriate for the task, the business can go ahead and find a surety bond company. 

There are many out there to choose from and it is usually best for businesses to ask friends and associates for recommendations rather than choosing at random. Once you have found a company you can trust, all that’s left to do is get bonded!

Is surety bond refundable?

If an insurance company is used to providing a surety bond, the insurer collects the premium and puts it in their general account. This means that if a claim should arise, the money collected for this specific transaction will be used to pay the guaranteed sum of money.

If an insurer fails to carry out any or either of these tasks, it cannot escape liability through payment or refunded premiums. The only exception is when the parties agree to cancel their agreement before any party has suffered damage (i.e., upon mutual consent). In such cases, refundable premiums can be agreed upon during the negotiation process.

What is a surety bond example?

A surety bond example is a loan agreement between three parties. The lender can be an individual, company, or corporation that provides the funds to be lent out. The second part of this agreement is known as the borrower. 

This is the party that requires financing for whatever reason. Usually, this reason has something to do with starting their own business or buying a home. Finally, there’s the third party in this relationship called the surety company.

A surety bond example ensures that regardless of whether or not the borrower pays back the lender, the third party will pay. This is an agreement made between three parties to ensure one party does not take advantage of another. It usually takes place when a person doesn’t have enough money to borrow from a financial institution like the bank but needs the funds for whatever reason.

To know more about surety bonds, visit Alpha Surety Bonds now!

bookmark_borderCan My Father Be My Surety?

surety bond - Can my father be a surety - two individuals having transactions

Can my father be a surety?

If someone wants to become surety for another person’s debt he should make sure that he has enough security to cover this debt. If one gives insufficient security without meaning to do so then his becoming surety will still take effect because  If someone does not have anything and cannot find anyone else willing to become surety for him then there is nothing wrong with his son becoming surety for him as long as he has enough to cover.

Concerning whoever claims that one of his family members can be a guarantee for him, then this is false. Rather the guarantee has to be someone who fulfills the conditions of being suitable in order to fulfill the role of guarantor. So it cannot be one’s father or anyone else from amongst his family members unless they are able to offer something (in return) which will cover his debts until they become due when he offers himself as a guarantor/surety for him.

Can a family member be a surety?

If the applicant does not have any known banking references, a known family member may stand as a guarantor for the loan application process to start. However, this is entirely at the discretion of the bank. 

Yes, you can use any blood relative as surety for your loan application, but it is better if he/she has a good credit score (700+). Not every family member will be comfortable with standing as a guarantor to your loan application. This will be considered a dangerous and risky thing for them, so it is better if you don’t show any pressure on them. 

The bank may allow blood relatives or friends to stand as guarantors to your loan application unless there’s something going on that makes it absolutely necessary for someone else to step up to guarantee a loan or mortgage. Even if they are willing to back you up, it doesn’t seem like there’s any reason why a family member should have to unless you are in some kind of dire financial straits that have no visible solution. 

Otherwise, there’s really not much of an advantage to having someone else guarantee the loan for you when you’re applying for one. If everything checks out with your credit history and current financial circumstances, then the lender shouldn’t need something like this in order to approve your application.

Can sureties be parents?

A decree of divorce should not be granted to a parent who is acting as the surety for the payment of school fees and other financial obligations that arise from the parent’s obligation to provide primary care for a child, according to a recent court ruling in Pretoria.

The ruling follows an application by a father for the rescission of the bond that he had signed earlier, constituting his sureties.

The respondent in this matter is not only one of the sureties on the surety bond but also pays school fees for his children, who are minors.

Can your spouse be your surety?

For reasons stated in the prior article, any loan agreement with a family member or friend can lead to serious consequences for all parties involved if things don’t go as expected.

One of the problems is that since it’s hard for most people to come up with their portion of payment quickly and easily (like when the deadline looms), the logical solution seems to be asking someone close by for help. After all, who else would let us down so badly just because we need them now? Somehow this situation seems different from those times when friends or relatives disappointed us in the past.

Somehow a family member or a friend becomes a “surety,” which is someone who answers for another’s debt, usually under contract law. Of course, when you make the loan agreement, you probably don’t think about it in those terms because everyone concerned will be careful and thoughtful about how they deal with each other. 

Additionally, if your spouse is helping to pay the tuition bill, then asking him or her to sign something along with you may never cross your mind. After all, he/she has been there from day one even when it wasn’t always easy – right?

Can your spouse be your surety?

In order to effectively, lawfully, and validly pledge your property as a surety for another person’s debt, one must first ensure that the following requirements are met:

  • First requirement: A discernible or identifiable person who is liable shall personally plead for the dispensation of his estate. In other words, only a person with personality can bind himself by contract. If it were allowed that corporations could be obligated without owners or directors who possess personality then mortgages would become very problematic because these obligations could not be enforced against them in case they still exist but have ceased operations.
  • Secondly: The one who pledges should be the owner of the property he intends to pledge. Hence, if there is encumbrance or charge over the pledged property, the pledgor should first remove or extinguish the encumbrance before he executes the contract of suretyship.
  • Thirdly: There must be certainty as to what is due and demandable on the principal obligation. The creditor should know with exactitude the amount which is due him from his debtor. If it is not certain, then there will be no basis for an action of mortgage, which is nothing more than security for money loaned.
  • Fourth requirement: The thing pledged must be real and existing; it cannot be merely ideal like future inheritance since anything which has not come into being cannot have value wherewith to secure a debt. Hence it would afford no protection to creditors if they are allowed to take possession of it.
  • Fifth: The two contracting parties must be lawfully authorized to bind themselves; hence, there is a need for authority from some competent person/entity, whether judicial or extrajudicial.
  • Sixth: It must be validly stipulated that upon non-payment of debt on maturity, the creditor shall have the right to sell the thing pledged. If he cannot this without first resorting to a court of law to determine the validity or invalidity of the debt, then there will be no basis for a mortgage.
  • Lastly: The creditor should have a right to sell even before maturity in case of insolvency on the part of the debtor. If, upon his insolvency, the debtor cannot lawfully make an arrangement with his creditors without first resorting to a court of law, then there will be no basis for an action of the mortgage.

To know more about surety bonds, visit Alpha Surety Bonds now!

bookmark_borderPersonal Indemnity And Your Surety Bond

surety bond - What is an indemnity bond with surety

What is an indemnity bond with surety?

An indemnity bond or an insurance bond is a document that protects the state against financial loss in case of attorney misconduct. The name “indemnity bond” refers to the fact that the lawyer promises an amount on behalf of himself and his company to pay back the state for any losses caused by wrongful acts. Indemnity bonds are contract documents; they bind both persons who sign them maintains their own list of approved surety companies). They can be considered contracts between three parties: 

1) The client

2) the attorney, and 

3) the independent posting guarantor the guarantor can be either a surety company or an insurance company

Every attorney is required to post an indemnity bond (or insurance bond). The purpose of the bond is threefold: 

1) to ensure that every attorney has the financial ability to pay back losses suffered by his or her clients; 

2) to guarantee that attorneys act responsibly and ethically in their profession, 

3) to protect consumers should they be injured by other professionals’ malpractice. Indemnity bonds are held at all times by the state bar association, which makes sure that no one breaks its requirements.

 All state bars require two types of indemnity bonds for attorneys—one insures against claims arising from legal malpractice and the other against criminal acts. For example, if someone accuses a lawyer of embezzling money entrusted to him, the state bar must be able to determine that such a thing is impossible if it examines the bond.

Is a surety bond the same as an indemnity bond?

A surety bond is not the same thing as an indemnity bond. Surety bonds are collateralized by the principal’s assets, whereas indemnity bonds are backed by the principal’s promise. Indemnity bonds are often referred to as moral obligations because they are usually offered when payment cannot be met otherwise.

The purpose of a surety bond is to assume risks for which its client may not be able or willing to assume themselves while taking on very little risk itself. A client will seek out a lender who can offer them favorable rates and terms on their loan. 

The client will also want protection against the possibility and current circumstances. Keep in mind that people use both of these techniques every day without even realizing that they cannot fulfill their financial obligations. The surety company provides them with this protection by taking on the risk that the client will not pay in the event that they become insolvent.

The purpose of an indemnity bond is to protect against loss. When a lender issues one, they are promising to take on any costs or damages which might be incurred during the course of business between themselves and the client. 

Lenders who issue indemnity bonds usually seek out clients who have high net worth, so there is little concern about finding someone able to fulfill responsibility for potential losses. Indemnity bonds are most commonly used in contracts involving large amounts of money or property, such as construction contracts or government projects. They may also be used when the payment would be difficult for one party to fulfill, such as payment for medical expenses.

What is the purpose of an indemnity bond?

An indemnity bond is a contract between two parties in which one party promises to pay the other party any damages that occurred because of his or her actions.

An indemnity bond can be used in all realms of life, but it is most commonly associated with legal disputes. For instance, when someone wants to file a lawsuit against another person, the defendant might be required to post an indemnity bond. This would guarantee that if the plaintiff won the case, he or she would receive payment for any damages.

Indemnity bonds may also be requested during estate settlement procedures, such as probate court cases and family law disputes about who should inherit a loved one’s belongings.

Indemnity bonds can protect both parties. For example, a homeowner might post a bond in order to secure a loan from a bank so he or she can build an addition to their home. During the construction process, the contractor causes damage that necessitates repairs. The homeowner may then request that the contractor be required to post an indemnity bond before continuing with the construction. This would ensure that if the contractor fails to complete the addition correctly, he or she will pay for its repair.

What is a personal indemnity?

Personal indemnity insurance is extra liability insurance that can be purchased to cover lawsuits against the insured when the limit of their underlying general liability policy has been exhausted.

The definition of a personal indemnity insurer could also refer to an individual who has purchased a personal indemnity policy and makes a claim against that policy in order to satisfy a judgment against him or her.

Personal indemnity insurance provides an extra level of protection in cases where a business’s general liability policy has been exhausted in the payment of claims. It typically covers off-site liabilities stemming from bodily injury or property damage caused by a faulty product or service and covers expenses associated with defending itself from claims made against it. 

Some policies also include coverage for advertising injuries when these have been intentionally created by the insured. This can prove especially helpful in preventing future claims from being made against the insured, as well as limiting their losses when this does inevitably happen. In any case, both general and personal indemnity policies are considered to be “excess” insurance; which means that they are only available after primary insurance coverage has been exhausted.

A personal indemnity insurer is also an individual who has purchased a personal indemnity policy and may make a claim against that policy in order to satisfy a judgment against him or her. In this case, the term “insurer” refers to the entity that issued the original indemnity policy (or its appointed representative) and not the individual purchaser of the policy. 

A claimant would “not” be required to purchase their own indemnity policy in order to receive coverage for a liability claim, though doing so certainly couldn’t hurt and might provide some additional protection not otherwise provided by your standard direct-to-consumer contract.

Can family members be surety in indemnity bonds?

If the person being insured is a stranger to the family, he/she will have to take his own guarantee. Family members can become guarantors for each other. But if you want to get married to someone who has no insurance (discussed here), an indemnity bond cannot be taken without the consent of your spouse because for this purpose, either you or your spouse will need to sign as guarantor. If anyone party wants this bond without informing the other, then both should apply jointly and not separately. 

Hence, family members are one of the safest options for guarantors as they will definitely trust you with their life, health, and wealth. If any member of your family wants to become a guarantor, he or she should have good financial standing. It is not necessary that only the father/mother will sign as guarantor, but other close relatives can too. 

When it comes to joint liability, all the joint applicants must be fit financially because if someone defaults on his/her payment then all of them are bound to pay back together. All must give these documents personally by signing printed copies, except for children who are minors; their guardians can give on their behalf. No one can become a guarantor for you unless they are known to have sound financial standing.

To know more about surety bonds, visit Alpha Surety Bonds now!

bookmark_borderWhat are Construction Bonds and How Do They Work?

surety bond - What is the purpose of a contractor's bond

What is the purpose of a contractor’s bond?

Both property owners and contractors are protected by bonds. A contractor’s bond ensures that the job will be completed at the agreed-upon price, on time, and according to code. You file a claim with your bonding company if the contractor fails to meet any of those conditions, and they negotiate reimbursement on your behalf.

You can issue your own contractor’s bond. It is not prohibitively expensive, as fees are typically 1-5 percent of the overall contract value for completed tasks. Hiring a surety agency, on the other hand, will expedite the bonding procedure and assist you in finding qualified applicants for contracts worth less than $25,000 USD. If you don’t use an agent, you’ll spend more in costs but save time on the application process.

In the building industry, who pays for bonds?

It’s an important topic to discuss because it has an impact on how teamwork works on the job site. Projects can become derailed if one side is unwilling or unable to carry out its commitments. Let’s take a closer look at what goes on behind the scenes of building projects by answering the following questions:

You want to know that if you hire someone to work on your house, they will be trustworthy and do an excellent job. That’s why contractors frequently demand a performance bond, which guarantees the owner that the work will be completed as promised.

The contractor normally pays for the performance bond, which protects the owner from financial loss due to bad workmanship or supplies. The bond can be provided by an insurance firm that acts as a surety, or it can be issued by another corporation that assumes responsibility for another’s activities (i.e., one trade subcontractor guaranteeing the payments and work performance of another).

In the construction industry, what is a payment bond?

A payment bond is a contract in which one party guarantees the fulfillment of another party’s obligation to the owner for a specific project type. There may be a statutory right to recover from a third party in certain circumstances, regardless of guilt or negligence on either party’s side. 

A payment or labor and materials bond ensures that a contractor will honor his or her duty to pay all subcontractors and material suppliers for labor and materials provided on the project. Performance bonds guarantee the faithful performance of any duty deriving from the construction contract that can be fulfilled without halting work or delaying completion, such as the responsibility to execute the work in accordance with the plans and specifications.

A payment bond is a document that a contractor signs promising to pay a subcontractor or supplier for services or goods. The general contractor has agreed to indemnify the customer against these claims, according to the contract.

What is the procedure for obtaining a construction bond?

A construction bond is a document that protects the property owner from contractor default. This document allows a business owner to seek legal assistance if a contractor fails to pay or meet his duties.

In most states, this paperwork is required for any construction project costing more than $500. It protects the owner and reduces disputes between the contractor and the owners.

A surety business issues the bond after learning that the contractor and the owner have reached an agreement on the contract’s terms and conditions. These businesses charge a portion of the bond’s coverage amount, which varies by state. 

The premium is charged when the contractor applies for the bond; but, unless the surety business imposes additional costs or taxes, there will be no further charges when they renew it every year.

What does the amount of the contractor bond mean?

If any governmental permits are involved in the acquisition of the permit, a construction bond is required by the owner or person funding the project. In this sort of contract, the obligee is usually the contractor, who must comply by posting a performance bond with a bonding agency that can be used for any reason. Once it’s been decided that a contractor would deliver payments to an individual contracting, there are a few steps that must be completed as quickly as possible.

1) Determine your requirements/permits.

2) Decide who will pay a portion of the insurance premiums.

3) Examine all bids/quotes to determine the correct bond amount.

4) Ask prospective bidders/offerors for the relevant bond form.

5) Demand a bond from a potential bidder or offeror (including the application and other required documents)

6) Go over the bond and sign it.

7) Before payments are released, return the signed bond to the contractor.

8) Notify your bonding business as soon as the contract is terminated or not finished. Failure to follow this step could result in a claim being refused and/or a late notification penalty.

To know more about surety bonds, visit Alpha Surety Bonds now!