As a prospective homeowner, it is a good idea that before you begin your project, you get protection from a reputable surety company. You do not want to start a project that will stall somewhere along the way, then be left with no money to complete, and no house to live in. that would be double jeopardy. So, you need to get a contractor’s bond, and make sure you understand its terms and conditions. Ensure that those terms favor you in every way to have peace of mind. Here are three ways of how this bond can protect you as a homeowner.
Ensure Project Completion
A contract surety bond essentially guarantees the homeowner that a contractor will complete his or her project according to their agreement. There are three parties involved in such an agreement. These parties are the contractor, also known as the principal, the homeowner or the obligee, and the insurance company or the surety, that issues that bond. Before a contractor wins a contract, they must show their ability to go through the project to its end. They must have a performance contract. The principal, or the contractor of the property pays premiums to a surety, or the insurance company. If the principal, otherwise the contractor fails to go through the project to its end, then the homeowner gets compensation for that loss. As a homeowner, you must ensure that you work only with bonded contractors to avoid unnecessary or unbudgeted expenses.
In addition to having a performance contract that ensures a principal or the contractor sees the contract to its end, it is good that the contractor also possess a payment bond. This bond ensures that the contractor pays his laborers and any subcontractors. In the course of your project, there will be other contractors that your main contractor will hire to work on various parts of your project. If you want to make sure that the contractor will hire competent subcontractors, just make sure that he possesses this bond. It forces the contractor, in addition to completing your project as agreed, to also do a professional job, and not leave you with unpaid dues to the subcontractors. The contractor is responsible for those payments. The bond also ensures that all parties supplying materials for your construction are paid, and paid on time. These subcontractors will give you the best services knowing that their payments are guaranteed.
Ensures Timely Delivery
As a homeowner, you surely must have a time limit for finishing your project. Any project that lags on forever will cost more money, than that which is completed within its planned timeline. There are those contractors who drag projects forever, just to make sure that they drain the project owners as much as possible. A contract surety bond should protect you from such. You must ensure that the contractor has as part of the agreement the timeline for your project. That way, you will be sure that the contractor will do their best to complete your project on time and same you time and money.