Written by: Nicole M. Garcia, Esq.
Construction bonds are a type of surety bond (used by investors to fund construction projects) that protect against disruptions or financial loss due to a contractor’s failure to complete a project or failure to meet contract specifications.
There are many different types of bonds required under Florida law for any construction project. Some are: Florida Financial Responsible Bond (a/k/a FRO Bonds), Permit Bonds or Right of Way Bonds, Construction bonds (a/k/a/ Contract bonds), Fidelity bonds, and Contractor license bonds.
One type of bond necessary in the Construction process in Florida is a Contractor License Bonds. These are surety bonds that are required to be posted in various cities and counties in the State of Florida in order to be licensed within that city or county. It is also a requirement in order for contractor to begin work on a construction project. These bonds are typically code compliance bonds wherein the bond guarantees the Contractor (i.e. the licensee) will abide by the terms of the license and codes prescribed by that city or county. There are over 30 different contractor license bonds required by various municipalities in the State of Florida alone. These surety bonds vary in amounts from as low as $1,000 up to $25,000 or more. The large majority of these cities and counties in Florida require surety bonds in the amount of $5,000.
It is no secret COVID-19 is wreaking havoc on our society and our economy as a whole. It is controlling and has changed the way we know life as it is. Surety bonds are no exemption to its wrath. Surety and bond producers are currently seeking emergency orders to allow Electronic signing and waive notarization. Investors in surety bonds are seeking emergency orders to allow electronic signing of bonds and to waive the pre-requisite of notarization of bonds. They are asking federal, state and local officials to take emergency action to update old surety rules requiring stamped notarizations and ink signatures that the Covid-19 pandemic has made very difficult to complete being that there are measures in place to stop the spread of the pandemic (i.e., social distancing and shelter rules)
It is feared that if is lawmakers don’t take action and implement changes the interruption in the normal issuance of sureties required for most public and private projects, could cause further delays in construction projects and inflict further injury to the economy.
Bonds are an important part of most construction projects. If these bonds aren’t handled properly, however, it can lead to many issues that can be very costly and time consuming. If you are being affected by the COVID-19 pandemic and are facing legal troubles please contact the Florida Construction Law Group at 305-227-4030 or firstname.lastname@example.org and we will assist you and ensure everything is set up and handled properly throughout the project.