Performance Bond

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    Michael Ermann

    Neither one…..the surety would pay $300k so the amount, out-of-pocket for the owner was fixed at $500k. In other words, a surety for a $500k project provides the owner peace of mind that, in the end, the project will still cost the owner $500k, even if the contractor flakes out.

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    Saba Ghazi Zahedi

    Thank you!

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    Saba Ghazi Zahedi

    What if the contractors defaults exceed the original contract sum? Like in this case it goes up to $1200. Does the performant bond cover the $700 or the $500 is the max?

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    Michael Ermann

    The surety will then cover everything so that the owner still pays what they were promised to pay. No matter what happens, the owner will take possession of a completed building at the promised price and the surety will cover everything else.

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    Saba Ghazi Zahedi

    Thank you so much!

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