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Maintenance Bond Requirement

Maintenance Men rappel down a building

A Maintenance Surety Bond is a warranty or guarantee that protects the owner of a payment and performance contract or construction project that either is already completed or about to be completed to provide a warranty for defective labor or workmanship, faulty materials, and design if the project was done improperly or incorrectly. The bond will ensure that the contractor will perform the required tasks through repair, replacement or correction of the defect or financially compensate the owner of the project if those options are not available.

There are three entities involved in a maintenance bond- a contract owner who is considered the obligee, the contractor who is considered the principal and the surety, which is usually an insurance company. The surety guarantees the performance of the contractor (principal) and if the contractor does not fulfill his contractual obligations, the surety may have to pay the contract owner or complete the work themselves. The surety will then seek remedy from the contractor for the loss that was caused.

The maintenance bond amount is usually 100% of the contract amount and covers a period of time (usually 12 to 24 months) after the work is completed for maintenance issues. Many contract owners are governmental entities and they often require a maintenance bond and a final inspection before they will release the bond.

Contract owners may have their own bond form which usually includes the maintenance requirements, the amount of the bond (penal sum), the period of time the bond will cover, and bond enforcement. The maintenance bond form language must be acceptable to the surety and in instances where the project owner does not have a bond form the surety can provide a generic bond form.

At the end of the bond term, the maintenance responsibility is then usually assumed or transferred to the contract owner.

There are many examples of maintenance bonds available for general improvements, erosion and sediment control, subdivision infrastructure improvements, highway restoration, new build projects and more available on the internet.

Below are several maintenance bond examples:

City of Carrollton TX-http://www.cityofcarrollton.com/home/showdocument?id=2539

City of Melbourne Florida-http://www.melbourneflorida.org/home/showdocument?id=478

Town of Nolensville TN- http://www.nolensvilletn.gov/data/sites/1/media/documents/forms/maintenance%20bond.pdf

Butler County OH-http://des.butlercountyohio.org/html/contractors/documents/maintenancebond.pdf

State of Pennsylvania- https://www.dot.state.pa.us/public/PubsForms/Forms/M-945K.pdf

How Much Will A Maintenance Bond Cost?

Premiums for maintenance bonds vary in cost and are dependent on many factors including the amount of the bond, the original amount of the contract, the bond language and personal and business financial statements.

To apply for a Maintenance Bond UNDER $250K, please fax these completed forms to 404‑351‑3237.

Have Questions?

Let our Surety Bond Specialists answer your questions about your bonding needs.

Phone: 1‑844‑432‑6637
Fax:     404-351-3237
Hours: 8:00-5:00 CST, Monday through Friday