When the owner of a property hires a contractor in Florida, they will typically want to have the contractor secure a performance bond in place prior to starting the project. This bond offers protection to the property owner so they can be confident that the job will be done as agreed. The protections to the project will cover the conditions of the finished product, the costs, and the time period for completion.
What Does the Performance Bond Do?
Performance bonds are a special type of surety bond that exists between the owner of the property, a surety, and the contractor. The contractor is the principal for this type of bond and will be responsible for obtaining the bond. The owner is the obligee, and they will be the ones who are being protected by the bond. The bond is then backed by the surety company, who will be responsible for the total amount of the bond should something go wrong.
Ensuring a Job is Completed
For the owner of the property where work is being done, the biggest reason to have a performance bond is to ensure the work is completed successfully. If the contractor is unable to complete the tasks as required, the bond will pay out to the owner. The owner can then take that money to find a new contractor and have the job completed as needed.
Another advantage of a performance bond is that the surety company that actually issues the bond is going to do their research on the contractor or contractors that are being hired. This is in addition to whatever research the property owner completes. Surety companies typically evaluate the contractor’s financial statements, their credit, any references they have, their resume, and current or past work the contractor is responsible for. For contractors, it is very important to ensure all of these things are going to portray a positive image of them so they won’t have any trouble having performance bonds issued.
Contractors can also benefit greatly from the investigation that is done by the surety bond company. Top contractors can earn a strong reputation, and more easily qualify for the bonds. This will often attract additional customers to their company, which can be very helpful for building a business.
Getting the Help You Need
Whether you are looking to get a new performance bond, or you are having legal issues enforcing one, it is a good idea to work with an experienced Florida construction law attorney. Contact FCLG to discuss your situation and get the help you need today.