Permit Bonds are required by a municipality or other public body as a condition to granting a license or permit to engage in a specified activity, this bond guarantees that the party seeking the license or permit (the obligor) will comply with applicable laws or regulations.
Most Installers, Contractors, Electricians, Truckers, Service companies, etc. will need some form of a Permit or a license Bond which is required by many States and government entities to obtain a permit or a license, and to be bonded before they can issue a new or renew his/her license bond. Contractor’s license bonds are also known as surety bonds or performance bonds. They are issued to protect the rights and interests of the clients for the contract. The bonds state that the contractor must satisfactorily complete the work or will compensate the client monetarily.
The client can legally sue the contractor if the contract is not completed as per her specifications. At the time of signing the contract, both parties mutually agree on the task to be completed, the budget and the time to completion. Contractor’s license bonds are usually used in the real estate and construction industries.
Surety Companies, Banks and financial institutions stand as third-party guarantees to these bonds. The premium on these bonds are a percentage value of the penal sum of the bond amount.
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