TYPES OF SURETY BONDS
Bid Bond - this is a bond usually requested to accompany bids where a paymentand performance bond will be required when a contract is awarded. Bid bonds are normally limited to a percentage of the actual bid in amounts of 5% 10% or 20% depending on who is requiring the bid bond. A bid bond does not guarantee a payment and performance bond will be issued, however, if for any reason the bidder is awarded the job and is unable or unwilling to provide a payment and performance bond, the obligee can obtain the difference between the awarded bidder's bid and the next lowest bidder's bid up to the limit of the bid bond amount from the surety.
Payment Bond - A payment bond guarantees that the contractor will not leave any unpaid amounts for work or materials or leave any liens against the project undertaken if the obligee meets their obligations under the contract. If a sub-contractor files a lien against the bonded project, the bonding company will issue a release of lien bond. The State of Florida has several statues regulating the rules of payment which will supersede any Florida contracts. (see state statutes 713.23, 713.245 and 255.05)
Performance Bond - A performance bond guarantees the contractor will faithfully preform the obligations as stated in the contract between principal and obligee. Often the bonding company will want a copy of the contract before approving a performance bond, especially if the contract is not written on standard AIA forms where unusual requirements might be made of the principal.
Sub-division Bond - A Sub-division bond is a performance bond required by a government entity such as a city or county to guarantee that certain land improvements such as streets, sidewalks, sewer mains, and other items will be made to a property being developed. Sub-division bonds are normally required of the developer of a property.
License & Permit Bond - These bonds are normally required of a contractor to obtain a license or permit to work within a specific municipality or state. These bonds provide a set amount of funds should a claim be filed against work preformed by the principal under the license or permit issued by the obligee.
Release of Lien Bonds - A release of lien bond it a court bond which will transfer a lien from a specific property to the bond so that the property owner has clear title to the property. If the lien does not fall under a payment bond, the bonding company will normally require collateral of 100% of the amount of the lien plus interest for 3 years and court costs to issue the bond. Normally a release of lien bond is obtained to allow the
owner to have clear title to a property. Liens can not be placed on government property.