Archive for December, 2012
Rochester New York publication The Sentinel to discuss the planning for a solar array to provide power for the New Bedford Water Department. During the discussion, a construction bond posting of $493,000 was indicated to provide assurance regarding the creation of a berm of vegetation. In addition, a cash surety for tree planting and landscaping around the array in the amount of $95,000 will be required. The construction bond will be released upon the construction of the berm and the surety will be released June 01, 2015, giving the trees and landscaping two years to establish themselves at the site.
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what is a surety bond and why they need it. Basically a contractor bond or a construction bond is used to enforce certain kinds of regulations in the industry. You don’t need to understand how bonding works to use them, but it does help to know the four kinds you will most likely use in the construction trade.
Contractor’s License BondsFor a contractor to even be licensed to work on just about any kind of project they will need to first post a contractor’s license bond. Working on a project without the contractor bond can make you liable for penalty fines and you might even lose your license or face legal action. The bonds are required by different entities depending on the project including the city, state, county, or even the subdivision in a residential development project. Since you need to bond to be licensed, if you don’t get it you will probably be also working without a license, another reason for big fines or more.
Payment BondsFor any contractors who have successfully bid on projects worth more than $100,000, there is a federal requirement that they post a payment bond prior to being awarded the project. The details of how and why are covered in an act passed by the Federal Government called the and can be read online. This includes not only construction projects but also any publicly funded project that involves such work as repairing or altering a building. These construction bonds are posted to protect subcontractors and vendors from non-payment on projects, so that the owner of the project isn’t left holding the bill if the contractor can’t pay. If this should happen, then the surety bond is pulled to make those payments. Most bonds of this type will be indemnified to allow the surety company to be reimbursed by the contractor on these cost payments.
Bid BondsNot every project requires a bid bond to be posted. However, many will require them at the time that the contractor is submitting their bid for the project. The bond will ensure that when the contractor turns in their financial proposal that if they win the bid that the proposal was made in good faith. This way it ensures the contract will be entered into by both parties at the amount of the bid and in the manner proposed.
Performance BondsThese are done to ensure to the owner of the project that the contractor will complete the project as stated and that the work will be not only of top quality but also completed within the timetable proposed. Often when a contractor is awarded a project both the performance bond and the payment bond will be required to protect the owner from financial problems on a project. If the contractor completes the project on time and the owner is happy with the quality of the job, all is well. But the posting of a performance bond assures the owner that if the contractor goes over the deadline or has to correct faulty workmanship, both of which will cost the owner money; the costs will be covered by the bond. Of course, bonding companies are not prone to issue a construction bond of any kind to a company that has not proven they are capable of meeting their requirements of the job. This means that for some contractors the first big hurdle will be to even qualify for the contractor bond. That is why it is so important for any contractor who wants to succeed to understand the bonding process so they can ensure they will qualify when the right project comes along.
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House Bill No. 3625: License Bond—Private Occupational SchoolsMassachusetts Legislature passed House Bill 3625 that will now call for all private occupational schools to carry indemnification through either the posting of a private school surety bond or other means, along with the requirement that they be licensed. The surety bond will need to be posted for at least $5,000. In addition, any representatives of these private occupational schools will be required to post either some type of indemnification or a surety bond for an amount of no less than $1,000 per representative. This bill was enacted on May 24, 2012 and went into law on August 2, 2012. To see the complete details of Massachusetts House Bill 3625 please follow our link to the legislative site.
House Bill No. 3833: License Bond—AquaculturesThe State of Massachusetts has authorized the Town of Mattapoisett through the passing of House Bill 3833 to require any businesses with aquaculture licenses to post a surety bond. The amount of the bond will be determined by the selectmen of Mattapoisett and must be equal to the costs for any measures the town will need to take to remedy deficiencies the licensee fails to take charge of and correct. This bill was enacted on May 10, 2012 and went into effect August 10, 2012. For a look at the complete details of Massachusetts House Bill 3833 please be sure to follow our link provided.
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A Virginia wholesaler of local agriculture has been suspended by the U.S. Department of Agriculture and will have his licensed on hold until the end of 2013 at the very least. The company, Let-Us Produce was suspended from production because of $1.8 million in unpaid bills. He owed to over 20 different creditors according to the recent report by The Packer, an industry publication. He was suspended under the Perishable Agricultural Commodities Act (PACA) which issues the licensing.
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