Business – Surety Bonds
Not every business owner is going to need surety bonds to continue their daily operations. However, when you do, it is important to obtain them from a reputable company. Issued by insurance companies, surety bonds are third-party contractual obligations. They represent obligations between the obligee, the principal, and the surety. The bond specifically guarantees that monetary damages are provided to the obligee by the issuer of the bond should the principal fail to perform the terms of the contractual agreement.
Circumstances Arising to the Need for a Surety Bond
As a business owner, the time might arise when you need to obtain a surety bond that assists you in guaranteeing payment for utility bills or state sales tax. If you are an attorney, one of your clients might need to post a court bond. This often occurs when settling an estate and assets need distribution among a variety of heirs. In many states, notary publics must post bonds during the normal course of their work. Contractors typically have to post a permit or license bond to ensure that they are following local ordinances.
Types of Surety Bonds
Since the types of surety bonds vary so widely, the cost to obtain them does as well. The following list indicates the main types of surety bonds that are commonly obtained.
- Public official – required to guarantee that an appointed or elected official will complete assigned duties properly.
- Probate and court– required by courts to ensure the proper performance of duties by a trustee or fiduciary as related to the settlement of an estate or the sale of real estate, including properties in foreclosure.
- Contract performance – used to guarantee the full compliance of the terms and conditions presented in a contract.
- License and permit – needed to guarantee that the principal party complies with all regulations and codes set up by the local, city, or state government.
- Miscellaneous – encompasses all other categories of surety bonds that have not already been accounted for, including but not limited to union wages, utility payments, and lost securities.