Ask a Professional - August 2007

Does the contractor I hire need a bond and what is a bond anyway?

    First of all a contractor by law needs to carry a “Surety” or a “Contractors” Bond in order to maintain their contractors license. The Surety Bond guarantees both job completion and payment of all materials. In general the bonding company will not have to pay more then the face amount of the bond. The required amount of the bond is $12,500.00. However there are additional options… The customer can get additional assurance by purchasing from the contractor a “Performance Bond” which will guarantee the projects completion according to the building plans and specifications. If the job is abandoned or the work is unacceptable, the bonding company has the option of hiring another contractor to complete the work or offering settlement for damages. A “Payment Bond” is another option that assures that no labor or material liens will be filed against the property. More on insurance issues next time.