What is a Surety Performance Bond in North Dakota?
The first party named in the contract is the Principal. The Principal of a surety bond is the individual or company seeking to have work completed on their behalf, e.g., someone with home renovation plans or opening a grocery store needs someone to build it for them.
The second party included in this contract is the Obligee, which refers to anyone who will benefit from having someone do work under contracts, such as property owners and retailers. The third-party included in the agreement is called the Surety or Settlement Agent and that person or entity guarantees that all terms of the agreement will be satisfied by both the Principal and the Obligee.
The terms of a North Dakota surety performance bond include:
Obligee is guaranteed to receive the service or work that is contracted for. In this case, that would be construction and renovation work. If any defect occurs, such as faulty materials or products used during the process, then Surety agrees to pay up to $10,000.00 out of pocket toward fixing these defects at no cost to Obligee.
Again, this benefit is only in place if the Principal (the person who wants their home renovated) makes a claim with Surety within 90 days of noticing any material defects in their newly renovated building. Of course, there are always exceptions to every rule. For anyone interested in knowing more about the “fine print” of these agreements, it is wise to consult a North Dakota surety bond attorney.
Just how much does a Surety Performance Bond in North Dakota?
These bonds are typically calculated as a percentage on top of your contracted project cost, x with total lineal feet multiplied by y with square footage multiplied times .00035 which equals z amount for this type of work in North Dakota.
First, you take the total contract price and multiply it by your percentage (4%, for example). Then, if we did a $75,000 project with 4% bond coverage after multiplying we get $3,000. Now we will go through each of these steps. If we do the first step, our answer would be:
(75 000 x .04 = ) 3,000. The next step is to take that number and multiply it by lineal feet multiplied by the square footage of the project. Lineal feet for us would be 150 ft x 300 ft which equals 45 000 ft squared; simple enough! Square footage, of course, will always be an even number, so 300 ft squared also works.
Finally, take your answer and multiply by .00035, or 3.5% (3.5% was only used for example purposes when in reality it would actually equal 4%). After doing this calculation, we find out our total cost for coverage on that project would be $300 dollars which is pretty simple compared to other states such as California.
What’s the process to get a Performance and Payment Bond in North Dakota?
In North Dakota, a performance bond is a guarantee that the General Contractor will perform its duties in accordance with the contract. A Performance Bond must be written on an approved surety for it to be valid. The State of North Dakota only accepts surety bonds from companies that have been pre-approved by them. There are no blanket or schedule contracts that can bring a company into compliance with this requirement.
A Payment Bond guarantees that subcontractors and material suppliers will not lose their work through nonpayment. Along with a Performance Bond, these two make sure the project is completed properly and on time per the terms of the contract between Landowner and Contractor. In order to ensure that everyone can receive payment, Landowners ask for payment bonds when they are the Construction Owner.
That being said, if you have already made a contract with a General Contractor to perform the work without bonds, in order to get them now, you will need to meet with your attorney and discuss options for how to proceed. One option is that the owner can sign an agreement stipulating that if there are any disputes over payment or completion of project elements between the contractor and subcontractors/material suppliers, these disputes will be handled through arbitration rather than litigation.
This way it would still be possible for parties who are unhappy with decisions made by Landowner during arbitration to file suits against Landowner after arbitration is complete. The Landowner should consult his attorney to determine which method would protect him best from liability should things go wrong during the project.
How to Get a Performance Bond in North Dakota?
A performance bond is a contract or agreement between two parties to act as indemnity for the other party. It generally requires one party (the “principal”) to compensate another party (the “surety”) if it fails to carry out certain responsibilities that are detailed in the contract.
A performance bond can also be referred to as an equipment trust certificate, contractor’s guaranty, sureties on construction contracts, letter of credit (L/C), bank letter of guarantee, payment bond, activity bond, and private surety. The following article will provide information on how to get a performance bond in North Dakota.
North Dakota provides many opportunities for contractors who need financial assistance through bonding programs; this includes public works projects throughout all of North Dakota’s cities and counties.
North Dakota also offers a prequalification program to contractors who wish to bid on state-financed projects; this includes public works such as roads, bridges, and dams in all of North Dakota’s cities and counties.
Where can I get a performance bond in North Dakota?
Performance bonds protect the owner of a contract in case the contractor fails to complete the job specified in the contract. The amount of the performance bond is supposed to cover any costs you would have incurred from completing the work yourself, which is why they are often known as “finishing funds.”
In some cases, where there aren’t a lot of risks involved with a project or when something has already been built but must be finished, it’s possible for a third party to provide what’s known as an availability payment instead of a performance bond. Availability payments are basically just partial payments that don’t need to be refunded unless certain conditions aren’t met.
Performance bonds and availability payments are terms that are bandied about most often in the commercial construction sector, so it’s important to note that homeowners aren’t typically required by law to provide either of them. However, there are situations where you may want or need to acquire one.
For instance, if you’re working with an architect who is bidding on a project under their license but will subcontract out portions of the job to unlicensed parties, the licensing board for architects may require that they submit a performance bond before they can be awarded the contract. If you’re unsure whether or not your architect is required by law to obtain one for your project, you should contact your local licensing board for architects for more information.