The construction industry is plagued with challenges and construction work is risky business for all parties involved. Project owners want high-quality work performance and subcontractors and suppliers want to be compensated for the work they complete. This is why parties rely on surety bonds.
Surety bonds are an integral part of government projects. If you plan to bid on government-funded contracts, it is imperative that you understand your contractual obligations and that you secure the right construction bond in Wilmington, NC.
Who is Involved in a Contractor Surety Bond in Wilmington, NC?
A construction bond in Wilmington, NC is a risk transfer mechanism involving three parties:
The surety: The bonding agency that guarantees that the principal party will fulfill the requirements of a contract.
The owner (obligee): The owner is the party that requires the surety bond agreement in which an obligation is owed to. The owner of a project can be the state, local, or federal government or it can be the general public.
The contractor (principal): The party that needs the bond in order to do business with the obligee.
What Type of Bond is Required of Contractors in North Carolina?
There are a variety of bond types which will vary by state, but in North Carolina, there are three types of bonds you need to be concerned with:
Bid bond: A guarantee to the owner that the contractor will honor the terms of the bid submitted and assures compensation if the contractor fails to do so.
Performance bond: Guarantees that the contractor will perform in accordance with the terms and conditions of the contract.
Payment bond: Guarantees that the contractor will pay their subcontractors, laborers, and material suppliers for work completed on a project.
Why You Should Call Cotney Construction Law
Surety bonds can be confusing. Signing a document you do not understand could jeopardize your financial assets. Although you will work with the surety to secure the bond, you want to be sure that you are working with a reputable surety bond agent who will advocate for you. Unfortunately, you can become a number, getting lost in an endless list of cases. If a false claim arises are you confident that the surety agent will properly advocate for you and get your claim resolved?
Cotney Construction Law advocates for construction professionals and can guide you through the surety bond process, ensuring that you fulfill your contractual obligations. If a dispute arises, we can communicate with your surety and handle bond claims on your behalf.
If you are in need of a professional construction law firm, please submit our contact request form for more information.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.