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Construction Law Authority / Posts tagged "bonds"

A Performance Bond’s Fixed and Flexible Scope.

The scope of a performance bond's protection is limited, but can be expanded. To ensure that the surety will be responsible for all applicable work, it is important to keep the bond's scope in mind throughout the course of the project, and expand it as necessary, to make sure the bargained-for protection is available, in the event you need it....

The “Infallible” Surety, Is Not Immune From The Impact Of A Bad Economy

When negotiating for payment and performance bonds, you should realize that even if you obtain the added protection, you are not 100% safe. Even though they might not be as likely as other construction entities to go out of business, sureties also go out of business. Furthermore, when they do, it can be as difficult to recover from a surety's estate as it is to recover from any other bankrupt construction entity....

Why Should the Condominium Association Require Bonds from the Renovation Contractor

               We often encounter Condominium Associations who have difficulty understanding why they should bond their exterior renovation contract.   Many Associations consider it money wasted on another layer of liability protection when they would rather spend the money on actual scope – sticks, bricks, and finishes. They do not expect the surety to pay the claims even if they are made against the Contractor’s Performance and Payment Bonds.  Association Boards often ask, “Isn’t the risk already covered by all the insurance required from the Contractor?” The short answer is, “No”, and here’s why.             A performance bond, unlike insurance, assures the Association that the Contractor, or its Surety, will complete the project even if the contractor goes bankrupt or cannot competently perform to complete the contract. In addition, sometimes a Surety can be required to pay Association claims for work not properly performed even after occupancy. See, Federal Ins. Co. v. The Southwest Florida Retirement Center, Inc.,...