A Payment Bond guaranteeing that a contractor will pay fees owed for labor and materials necessary for construction of a project. If these fees are not paid, an owner who has paid the contractor might be confronted with subcontractor’s or worker’s liens filed against the completed project. If this happens, the owner could end up paying many times the value of the work done. We are located in Houston Texas but we serve all other cities and States nationwide.
If this is a bid bond, include special bond forms and bid specification
If this a for a new contracted project, include a copy of the contract purchase order
How Does a Payment Bond Work?
In the construction industry, the payment bond is usually issued along with the performance bond. The payment bond forms a three-way contract between the Owner, the contractor and the surety, to make sure that all subcontractors, laborers, and material suppliers will be paid leaving the project lien free. Payment bonds are surety bonds that ensure subcontractors and material suppliers are paid according to contract. These bonds are critical for jobs on public property where mechanic’s liens (security interests) cannot be used. When do you need a payment bond?
What is a Payment Bond?
A payment and performance bond is a type of contractual guarantee offered by a contractor to the owner of a property or asset for a specific project that the contractor is willing to do. The bond ensures that the contractor will complete the project as specified, or face serious default penalties.
How Does a Payment Bond Work in Construction Project?
Although not usual, payment bonds can be required without having performance bonds bundled together. The payment bond needs to be purchased during the bidding process and submitted to the owner once the project has been awarded. Payment bonds will normally specify the time and payment to employees, suppliers, and subcontractors.