How Construction Bond Works

When looking for a contractor to handle your construction project, choose one with a bond. A contractor bond is the assurance that the contractor that you hire shall perform the way they promise you. If the contractor fails to perform as per the promise, the company that issued them with the bond pays the damages. This is simply how a construction bond works. It’s important to ensure that a construction company has a bond before you hire it. Binding is one of the ways of regulating the construction industry. Here are some of the types of bonds commonly used in the construction industry.

Bid Bonds

This is a bond that protects a property owner. With this bond, the property owner is assured that the hired construction company will honor the original amount of the bid. A contractor and the bond issuer can be sued to recover costs. Bid packages include bid bonds as well as the financial information of the bids. It’s important to note that not all projects require bid bonds. However, bid bonds are necessary for large construction projects.

Performance Bonds

A performance bond assures the project owner that the construction company will perform as per the terms of the signed contract. Perhaps, you have come across construction projects that have been abandoned halfway. A performance bond protects project owners from such occurrences.

If a construction project is left incomplete or if a contractor does a poor quality job, the project owner will be compensated if the contractor has a performance bid.

Payment Bonds

This bond ensures that a contractor pays suppliers and subcontractors. If something happens and the contractor fails to pay the electrician for example, they can go after this surety and the contractor will be have to pay them.

License Bonds

A license bond ensures that the hired contractor is licensed to complete a job. This bond is bought by a contractor when it’s a bidding requirement for a project. A contractor without a license bond can face numerous problems including license revocation and heavy fines.

It’s important to choose a contractor with these bonds when hiring building a house to ensure your safety just in case things fail to turn out as planned.…

Top Contractor Scams to Avoid

Top Contractor Scams to Avoid

Although there are hardworking, honest professionals in the construction industry, there are scammers too. Unfortunately, even scammers seem like legit contractors. To avoid being scammed, it’s wise to know the top contractor scams to avoid.

Need for Money Upfront

This is a common contractor scam that you should avoid. A contractor will argue that they need money to rent earth movers and buy materials in order to start working on your project. Some will ask you to pay between 30 and 50% of the price of the project upfront. Unfortunately, if the contractor is a scammer, you will never see or hear from them again.

To avoid this, avoid paying more than 10% upfront for a construction project. That is the legal maximum required by most states. It’s also sufficient to establish that you are a serious client.

Take My Word for It

On meeting a contractor for the first time, they might be very agreeable in regards to doing what you specify. They can even suggest extra upgrades and touches. Some of these details might not feature in the written contract agreement. It’s easy to be tempted to assume that this doesn’t matter because your verbal understanding with the contractor is clear.

However, the contractor may not include the discussed extras after sometime. On confronting the contractor, they will simply tell you that they were not included in the contract. That means you will either have your house built without them or spend more money to have them built.

No Need for a Permit

Significant construction projects require building permits. This enables building officials to come to your site periodically in order to ascertain that the work being done complies with safety codes. It’s the contractor who should get the permit because they are the one to do the job. If a contractor tells you that your project doesn’t need a permit yet it is major, avoid working with them.

Other contractor scams to avoid include being told that a contractor ran into unpredictable problems that need more money to solve. Others may ask you to buy building materials from them. If you come across such scams, look for another contractor.


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Secrets to construction that you should remember

When it comes to construction and hiring a construction contractor, there are some secrets that you need to know. Secrets that the contractor doesn’t want you to know. The moment that you know these secrets, you will be able to hire a contractor much easier. You will know what to look for and what to look out for. This is the only way to ensure that you are hiring the right person for the job.

Paying a deposit isn’t necessary

You don’t need to pay a deposit. No matter what. There are many construction contractors that are asking a 50% deposit. They are claiming that this is to be able to purchase the material that he is going to use.

There is no reason that you should pay money for something that isn’t done yet. This is a mistake that many people are making. And, most of the time the contractor disappears with 50% without even starting on the project. If he needs to pay the material, you can pay it and just pay him for the work done. This is sometimes the safest bet.

There is more than one contractor that you can hire

Don’t hire the first contractor that you can find. This isn’t going to be the best decision that you can make. There is more than one construction contractor that you can use. And, you might even find one that is more recommended and that have more experience and references.

Take your time and interview as many contractors as possible. This is the only way to make sure that you are choosing the right person for your construction project.

Make sure that you read the contract completely before signing

Construction contractors are popular for adding small print to the contract. And, most of the time it isn’t in the best interest of the other party. This is why you should make sure that you read the contract completely before signing. It might also be a good idea to hire a lawyer that will be able to go through the contract and making sure that it is legit.

With knowing these secrets, you will know that you are going to hire the best construction contractor that you can find. And, that your construction project will be successful and worth all the trouble. There are lots of money at stake, and you should make sure that you don’t lose most of it, to a scammer.