Types of Surety Bonds
Surety bonds are written are signed to get a commitment on the money, property or any other services. Based on the type of commitment from the bond contractor will have to sign the bond.
Different types of Surety Bonds and descriptions are as follows:
- Payment bond – is signed when some money has to be paid against a project or work. Contractor has to pay as per the bond the money to the person who worked on the project and completed it.
- Performance bond – is a type of surety bond which is signed for the work contract. This gives the commitment to complete the work as per the terms and conditions as agreed upon the bond.
- Bid Bond – which accompanies Payment and Performance bond. This bond gives the amount or percentage of bid that is placed over the actual amount. This bid bond might not commit on the payment or performance that was bided but contractor can pay an amount that is less than what the other lowest bidder bid.
- Sub-Division bond - is signed for the development of land or any property with government’s concern. This bond is a type of performance bond. This bond is required by city or county’s government body for land or property development.
- License or Permit Bond – it needs to be signed to get permission to work in a specific city or country. If one is found working without this bond or outside this city limits as per the bond they are subject to pay an amount as fine.
- Release of Lien Bond – is a bond from court to get a clear owner ship over a property or a land which belonged to someone else. If the lien property is not under property bond then the company buying expects 100% payment with 3 years of interest and court charges to release the bond.
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