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The Surety Perspective of Bond Ability Letters

The Surety Perspective of Bond Ability Letters

There are several reasons why the Letters of Bondability do not satisfy the intent of the owner or obligee.  First we must look at the letter from the perspective of the surety.   Prequalification of the contractor is one of the major elements of a performance bond.  It has the same relationship as lumber has to a carpenter.  When project owners …

 

What does the Bondability letter accomplish?

What does the Bondability letter accomplish?

The letter of bondability at best shows a perspective owner that the contractor has a relationship with the surety company. Frustrated obligees have sued sureties over the letters because they would not furnish the bond later to no avail.
The following is an excerpt from a letter:
If Contractor is the successful proposer and is required to provide performance and/or payment …

 

Why do owners require a Surety Bond?

Why do owners require a Surety Bond?

Having a surety bond benefits every party involved in the transaction.  The oblige, who is the owner of the project is given reassurance that contractor companies with available surety credit are financially sound.  This benefits the contractor because the surety helps the contractor to grow slowly while building up their credibility in the industry.  Also, the lender for the project …