3 Types of North Carolina Construction Bonds
There are many types of construction bonds that are utilized by construction professionals in the Tar Heel State. Bonds are an effective legal tool designed to guarantee that projects reach completion with all parties meeting their obligations. Both owners and contractors can acquire a Raleigh construction bond, but the type of bond required will depend on your role on the project.
In this article, a Raleigh construction attorney from Cotney Attorneys & Consultants will discuss three types of North Carolina construction bonds that all contractors should know about. Our attorneys have been assisting contractors with all of their bond-related needs for years, including filing bond claims and Miller Act notices.
1. Bid Bonds
Contractors must oftentimes acquire bid bonds before a project owner will accept their bid and award them a contract. Bid bonds help protect the owner in the event that a contractor is unable to complete a project according to the terms of their bid. When a contractor violates a bid bond, the contractor and the surety that issued the bond are liable for providing the necessary funds to find a valid replacement for the contractor.
Bid bond claims occur when the cost of work increases once a project has commenced. Sometimes, the reason this happens is out of the contractor’s control. It’s vital that contractors maintain all records and paperwork related to the project in question. That way, if a bid bond claim is filed against you, your Raleigh construction lawyer can disprove the claim. Another benefit of partnering with a lawyer is that your contract can be drafted to protect you against externalities that are outside of your control and affect your ability to meet project deadlines.
2. Performance Bonds
Performance bonds are used to ensure that contractors meet the terms and conditions of their contract. When a contractor fails to perform their duties, the performance bond protects the owner. For example, a performance bond can help prevent a contractor from abandoning a project or performing subpar work. If you become the target of a performance bond claim, consult a Raleigh construction attorney from Cotney Attorneys & Consultants. You will want to respond to the claim properly, otherwise you could find yourself responsible for damages.
3. Payment Bonds
Your subcontractors and suppliers need to get paid for the work you contract them for. Payment bonds help ensure that they do. When a contractor withholds payment from subcontractors and suppliers, the surety that issued the payment bond will compensate these workers. In turn, the contractor will be forced to repay the surety. Bonds help keep all parties honest and ensure that everyone is paid for their work, but conflict can arise when bonds are violated. For all of your Raleigh construction bond needs, consult an attorney with years of experience fighting for the industry.
If you would like to speak with a Raleigh construction lawyer, please contact us today.
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.