Surety Bond Law & Litigation
Contracts for construction projects, as well as pertinent laws, can be very complicated. How many times have you seen a large project come to a screeching halt all of a sudden and remain dormant for years? Or, how many times have you heard about owners not paying their contractors in full once the work was complete?
Gainesville Surety Bond & Litigation Attorneys
Surety bonds help protect all parties involved in a construction project in the event any work isn’t completed or compensated. The Surety & Fidelity Association of America (SFAA) defines a surety bond as “a written agreement that usually provides for monetary compensation in case the principal fails to perform the acts as promised.”
Without a surety bond, an owner would have to bear the cost of a contractor going bankrupt, or a contractor would be fully liable if a subcontractor fails to perform the required work.
Since 1995, sureties have paid out an estimated $10.4 billion according to the SFAA.
A Surety Bond Is Not Insurance
Although there are some similarities, it’s important to note that a surety bond is different than insurance. Both provide compensation for financial loss and are considered “risk transfer” mechanisms. However, an insurance policy transfers risk to the insurance company whereas the risk stays with the principal with a surety.
Insurance policies in effect spread risk while a surety is considered a form of credit. If a claim is made against a surety, the principal will be required to pay the money back.
Surety companies each have their own criteria for underwriting a contractor. They will evaluate whether the applicant has the skill to complete the project and if they have the financial backing for the amount of risk the surety is covering. A surety company will also carefully evaluate the applicant’s prior record to determine if they are able to fulfill the obligations they are taking on.
How Does A Surety Bond Work?
Let’s say you’re a homeowner and you have a contractor building a new home for you. About halfway through the project, the contractor all of a sudden disappears and leaves you with a half-finished house. A surety bond will help find a replacement to finish the job and ensure payment to any sub-contractors.
The surety bond will then need to be reimbursed (indemnification) by the principal for these expenses.
It can work the opposite way as well — if a property owner fails to uphold their end of the contract by not paying for completed work, the contractor can file a claim with their surety to ensure they will be paid.
The surety bond essentially guarantees the work will be completed and all contractors and subcontractors will be paid.
To avoid any legal issues down the road, it’s highly recommended owners and contractors consult with an attorney before finalizing any contract.
If a situation does arise and a surety bond must be used, an attorney will be needed to ensure the process goes as smoothly as possible. A good surety bond attorney will have extensive knowledge of any applicable laws and prior case law, the capacity to investigate claims, and the ability to find the best method for resolving the dispute.
Attorneys at Warner, Sechrest & Butts, P.A. provide owners, contractors, sub-contractors, and sureties across Florida with effective representation.
Gainesville Surety Bond Attorneys You Can Trust
Attorney Robert Butts of Warner, Sechrest & Butts, P.A. in Gainesville is one of only a few attorneys in the entire state who is board-certified for construction law by the Florida Bar Association. Although Mr. Butts and associates possess an extensive litigation background in local, state and federal courts, they don’t always rush into court for every dispute.
They carefully evaluate your case to determine the best avenue for resolving the issue. Sometimes, mediation is all that is needed to either find a new contractor or reimburse the surety bond for payments made to subcontractors.
In addition to his designation from the Florida Bar, Mr. Butts is also a Certified General Contractor with extensive experience in both commercial and residential construction. This, of course, provides construction law clients of all types — owners, contractors, subcontractors, and surety bond companies — with a unique perspective and robust representation.
It’s important you not wait to initiate a surety bond claim or discuss your case with an attorney. Florida law stipulates that you have 1 year after final furnishing to file a claim. Do not delay — contact surety bond attorney Robert Butts and associates at Warner, Sechrest & Butts, P.A. in Gainesville to discuss your case today.