By John Pinkney
Asset managers and property owners should have a full understanding of surety bonds in order to manage risk regarding contracted construction work. Surety bonds are an excellent resource for reducing the inherent risk that is involved in any contractual construction project, and those who have the best understanding of surety bonds, such as those who have consulted a Coachella Valley real estate attorney, have traditionally had the most success in the scope of contract negotiations and enforcement of duties.
How Surety Bonds Can Protect Owners
Insurance agreements create a legal relationship between parties only after work has commenced on a project. Surety bonds are established prior to the commencement of work, and they will last until completion of work. Surety bonds are therefore a more effective means of finding recompense in the event that a contracted duty is not carried out, and they are thusly a better means of maintaining contractor accountability. Insurance will typically only protect owners from casualty loss and property damage, while surety bonds maintain a broader application, protecting the property and its owner from legal wrongdoing.
How Surety Bonds Provide a Guarantee
Surety bonds also provide a guarantee that suppliers and subcontractors who are attached to a project will be paid in the event of any unexpected financial loss, effectively eliminating the risk of incurring liens from either of those parties. Because of a surety bond’s specific and demanding nature upon contractors, it is typically easier for owners to find reputable contractors by simply inquiring into their eligibility for obtaining surety bonds. Eligibility is a good gauge of a contractor’s creditworthiness, and their ability to complete contracted duties.
Recent Regulations in California to Compensate Contractors
California has recently passed regulations requiring owners to compensate contractors attached to large projects in the event the owner fails in his or her contractual duties. It is important to consult real estate and land law attorneys in Coachella Valley to discover how surety bonds may greatly mitigate the effects of these regulations.