all the T’s – with the assistance of your legal counsel and consultants, of course – and you are wanting to put all assurances in place to safeguard the result of the project itself. Am I getting what I pay for? What if the construction company does not finish on time – or worse, abandons my projects?

Bonds Y

— By Ann Hart —

A construction bond is a security deposit issued by an insurance company to protect the association against contractor default.

ou are about to embark on an 18-month construction project, and your board is tasked with dotting all the I’s and crossing

contractor performs the duties outlined in the contract, and ensures that subcontractors get paid. There are several types of bonds to consider with construction projects and general contractors, including contractor’s license bonds, performance, bid, payment, and builder, maintenance, or plat bonds.

There are contractor’s license bonds, performance, bid, payment, as well as builder, maintenance, and plat bonds.

While we don’t typically see such extreme instances as these, as your managers and consultants are often referring you to sound contractors (many who are members of WSCAI), protecting your association is always a good idea. When your consultants and attorneys are reviewing your construction agreements, strong requirements for construction bonds will help your community recoup lost funds or damages should the worst occur.

Types of Bonds

A construction bond is a security deposit issued by a surety company (an insurance company) to protect the beneficiary (the association) against contractor default, ensure that a

Contractor License Bond:

An annual bond carried as a state-imposed condition of obtaining a contractor’s license which is renewable annually. Every contractor in Washington state is supposed to have one and the minimum amount is $12,000. The contractor license bond ensures that the bonded contractor pays all persons performing labor (including employee benefits), all Washington state taxes and contributions, all suppliers or other persons furnishing material or renting or supplying equipment to the contractor, and all amounts adjudged against the contractor for breach of contract including improper work in the conduct of the contracting business. 19

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