Is not it a beautiful expression? "If it looks like a duck, swim like a duck …"
This article is about a problem that we often see: the cases where the type of bond has not been correctly identified, the wrong application has been used, the time lost, etc. This was repeated last week:
The agent called us with a bail requirement of about $ 10,000. They used an abbreviated form and sent it to another surety who rejected it. The reason given "the applicant was the main one." The applicant is always the main one, so that did not help. We dug deeper.
The client and the agent thought that they needed a performance bond (P & P), but we quickly identified it as a surety bond – most sureties did not do not do it. Let's review the key questions and features that make it easier to recognize a site link when queuing.
A performance guarantee and payment guarantee a construction contract in which the applicant / principal is paid by the beneficiary to perform the work.
Site Bond is written with the city or township as the obligee, guaranteeing that a developer or real estate owner will build the required "public improvements" at his own expense and then dedicate them to the township.
Here are three key questions to get you on the right track:
Q. Who is the beneficiary who requires the bond?
A. On the links on site, it is always the municipality or the city whose planning board has approved the project.
Q. Is there a construction contract?
A. There is no contract between the township and the owner or contractor. On P & P bonds, there is always a contract between the originator and the creditor.
Q. How was the need for the link born?
A. On surety bonds on site, the engineer of the township or town writes to the owner describing the necessity of the bond, the works it covers, the "public improvements" and the value in dollars. On P & P's obligations, there are written specifications (requirements) and a construction contract.
Another clue that helped us charm, I mean crack, this case was the small amount in dollars. You could get site bonds for less than $ 5,000, but it would be extremely rare to use such a low level with a P & P bond.
So now, when we land on your desk, you'll recognize it. Any of your business customers may need it when upgrading or modifying their property. The next question is to choose a market. Most sureties do not write them – it's a problem.
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