Site Improvement Bond for Construction
Acquiring A Site Improvement Bond – Basics, Procedure And Purpose
As someone, who operates a construction company, within Canada, you need to familiarize yourself with the site improvement bond. There are innumerable entities, businesses and consumers that want to improve their existing homes or storefronts and your business may be able to help and profit from the endeavor. In order to legally acquire the rights to one of these projects, you may be required to obtain a site improvement bond. In order to prepare yourself to obtain this bond, you should read the information below and learn about this construction surety bond right now.
There is truly an abundance of bonds, which are commonly utilized within Canada’s construction industry. Although the site improvement bond may be less frequently used, it has its purposes and can be prove to be very beneficial for developers and owners. As the name implies, this type of bond is primarily utilized when the contractor intends to improve a current site or structure. It cannot be used, when attempting to work on a brand new building. The subdivision bond works with new residential structures, while the site improvement bond allows improvements to be made to existing structures.
Each unique type of surety bond comes with its own individualistic set of purposes. When it comes to the site improvement bond, the purpose of the bond is to help ensure that the improvement is carried out as initially agreed upon. Although the majority of construction companies will do their best to satisfy their clients, the bond helps to guarantee that they’ll satisfy in every way imaginable. Of course, this type of bond can also protect the building owner from other malpractices and devious behaviors, as well. If the contractor does anything illegal or commits fraud, the building owner will be protected and may be reimbursed by the bond.
With this in mind, it is always wise for all building owners to acquire a valid site improvement bond, before allowing a contractor to carry out work on your building!
Who Does the Site Improvement Bond Protect?
Site improvement bonds are a form of security that will be set in place, before the project is initiated. This bond protects the project owner from monetary loss. The surety company takes on the full responsibility to pay the proposed penal sum, if the building contractor does not fulfill the terms of the contract. Of course, there is a claim process that the project owner will need to complete, before judgment is rendered.
If at any time, the surety is forced to pay the penal sum, action will be taken against the principal (contractor) to ensure reimbursement. It is important for contractors to comply by the contractual agreement to avoid ruining their business reputation.
Understanding The Potential Cost
If you’ve been in the industry for a period of time and have purchased a handful of bonds, you’ll know that the prices can deviate substantially. This can make it incredibly difficult to figure out precisely how much you’ll be required to pay, until you’re required to pay it. However, you should know that a handful of variables could help to determine your overall expenses. These include your personal credit score, the size of the project, and financial credentials. Also, the longevity and experience of your business may prove to be impactful.
To acquire the lowest cost possible, it is vital to keep your business reputation flawless, maintain a good credit score, and do extensive comparison-shopping. Read more on Surety Bond Costs in Canada.
Acquiring the site improvement bond isn’t necessarily a complicated process, but it can be lengthy. However, it should be known that maintaining the validity of your bond is pertinent and will require a lot of effort on your behalf. If you fail in some way, your company may be hit with a claim from your client. Since a surety bond claim could result in disastrous losses, it is essential to avoid them in the first place. Aside from completing the job to the best of your ability and within a reasonable period of time, you should also maintain an open line of communication with the client.
If they’re able to contact you and make complaints, you’ll be able to work with them closely and prevent problems from escalating into claims. This is pertinent and will help to keep the problem out of the surety company’s hands.
The National Research Council Canada has devised a set of building codes that must be regulated by all developers, plumbers, electricians, building contractors, and etc. A government official will do whatever is necessary to regulate and mandate these Canadian building codes. One way to guarantee compliance is by requiring all companies that fall within the construction industry to obtain a surety bond. The site improvement bond will not only guarantee the obligee (project owners) of a project completion, but will ensure the NRC that the bonded contractors are complying by the building codes.