When violent weather events occur in residential areas, they usually leave a path of destruction behind them. Homes can sustain all kinds of damage that require immediate attention, and there is never any shortage of strangers promising to repair that damage for a fee. Seattle, Washington officials always warn residents not to be fooled by unscrupulous offers of help. They tell citizens that honest contractors will have contractor bonds Washington homeowners can check out.
There is a difference between a contract bond and insurance. Insurance compensates an individual in the case of loss. It accepts risk on behalf of an individual. A surety bond guarantees payment for a debt incurred by a third party. Its purpose is to prevent loss. A surety bond is essentially an agreement between three parties, the client, the surety company, and the person doing the job.
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.
Additional contract agreements include maintenance, supply, and site improvement. Contractors who construct waste management systems, sidewalks and streets in subdivisions must have a subdivision bond to guarantee all work is completed according to specifications.
In the mid nineteen thirties, Congress enacted the Miller Act. It required contractors to have payment and performance agreements when they were awarded public works contracts with a value in excess of one hundred thousand dollars. Since then, many states have enacted similar laws, called Little Miller Acts, regarding contracts for public works projects.
Contractors must meet certain standards before they are issued any kind of surety bond. They have to show they have the character to be trusted with contracting responsibilities and pay their bills promptly. A contractor must have the ability and capacity to perform the job. He or she has to have adequate equipment and the necessary staff to complete the work. A contractor must demonstrate financial security and reliability.
Contractors do default, and the surety company is left with only a few options. It can contact the client and try to get an agreement that will allow a rebid in order to finish the job. Depending on the situation, the company may decide to give the contractors the funds necessary to complete the job. If the company does this, contractors must repay the loan with interest out of profits from the work in question. The company can also reimburse the client for any losses.
Defaulting on a bond has serious repercussions for contractors. It is hard to get another company to issue the agreements they need to bid on jobs, guarantee payment to third parties, and to assure clients they will perform a job as agreed.
There is a difference between a contract bond and insurance. Insurance compensates an individual in the case of loss. It accepts risk on behalf of an individual. A surety bond guarantees payment for a debt incurred by a third party. Its purpose is to prevent loss. A surety bond is essentially an agreement between three parties, the client, the surety company, and the person doing the job.
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.
Additional contract agreements include maintenance, supply, and site improvement. Contractors who construct waste management systems, sidewalks and streets in subdivisions must have a subdivision bond to guarantee all work is completed according to specifications.
In the mid nineteen thirties, Congress enacted the Miller Act. It required contractors to have payment and performance agreements when they were awarded public works contracts with a value in excess of one hundred thousand dollars. Since then, many states have enacted similar laws, called Little Miller Acts, regarding contracts for public works projects.
Contractors must meet certain standards before they are issued any kind of surety bond. They have to show they have the character to be trusted with contracting responsibilities and pay their bills promptly. A contractor must have the ability and capacity to perform the job. He or she has to have adequate equipment and the necessary staff to complete the work. A contractor must demonstrate financial security and reliability.
Contractors do default, and the surety company is left with only a few options. It can contact the client and try to get an agreement that will allow a rebid in order to finish the job. Depending on the situation, the company may decide to give the contractors the funds necessary to complete the job. If the company does this, contractors must repay the loan with interest out of profits from the work in question. The company can also reimburse the client for any losses.
Defaulting on a bond has serious repercussions for contractors. It is hard to get another company to issue the agreements they need to bid on jobs, guarantee payment to third parties, and to assure clients they will perform a job as agreed.
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