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What Contractors Can Do During the Coronavirus Pandemic – A Bonding Agent’s Recommendations

In a world turned upside-down by a global pandemic, contractors are likely working extra hard to make sure their business is braving the storm. They may be experiencing a variety of struggles, including a shortage of labor & supplies, cash flowing payroll and liabilities, and completing contracts on schedule. During a time like this, it’s important for contractors to turn to their trusted advisors who can provide reliable information and guidance. Here are five measures from a bonding perspective to ensure your business can continue to run smoothly, while staying out of trouble with the surety company: 1. Have a construction attorney review your current contract(s) to avoid performance bond issues. Understand what rights you may have in this situation, especially related to force majeure. Force majeure is a contract provision that allows you to call a stoppage on work during a crisis like the Coronavirus pandemic, without incurring performance bond claims. If your contract was signed after the President declared a State of Emergency on March 13, however, the owner/GC could state that COVID-19 was a known risk, and any delays could be the responsibility of your company and result in liquidated damages. This is not legal advice...

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Mortgage Broker Bonds

The mortgage industry is highly regulated, and the people who work in it are held to high standards. Mortgage brokers must be licensed by the states they work in, and most states require the purchase of a mortgage broker surety bond as part of the licensing process. Learn more about these bonds below, and request a quote from Surety Bond Professionals today. What Are They? As the “middlemen” linking borrowers and potential lenders, mortgage brokers handle a lot of sensitive personal information. A mortgage broker bond serves as a broker’s guarantee to operate entirely within the law in obtaining and handling that information and carrying out all duties of the position. The bond is intended to ensure the availability of funds to compensate any party who suffers a financial loss due to the broker’s unlawful or unethical actions. Who Needs Them? In all but a few states, anyone seeking to obtain or renew a license as a mortgage broker is required to purchase this type of bond. It a type of license and permit surety bond. How Do They Work? The agency that licenses mortgage brokers in each state is known as the bond’s obligee. The obligee determines the...

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Freight Broker Bonds (BMC-84 Bonds)

Freight Broker Bonds (BMC-84 Bonds) Learn more about BMC-84 bonds below, and contact Surety Bond Professionals today to request a quote. Our experienced surety agents are ready to help you get the bonds you need. What Are They? The Federal Motor Carrier Safety Administration (FMCSA), which is an agency of the U.S. Department of Transportation, requires freight brokers and forwarders to put up $75,000 in funds to provide financial protection for shippers and carriers. This provides funds to pay shippers’ or carriers’ claims who are owed money from a freight broker or freight forwarder. This requirement can be met by either: Purchasing a $75,000 surety bond, known as a BMC-84 bond Putting up cash or line of credit (LOC)—or some combination of cash and LOC Because purchasing a BMC-84 bond is part of the process of obtaining an operating license, it’s categorized as a license and permit bond. Who Needs Them? Any freight broker or forwarder seeking a license to operate within the United States must purchase a BMC-84 bond or put up $75,000 in cash and/or an LOC. Many brokers and forwarders choose to purchase a bond rather than tie up their cash or credit and pay a...

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Notary Public Bonds

Notary Public Bonds Learn more about notary public bonds below, and contact Surety Bond Professionals today to request a quote. Our experienced surety agents are ready to help you get the bonds you need. What Are They? First, consider what a notary public does. According to the National Notary Public Association, a notary public is “an official of integrity appointed by state government to serve the public as an impartial witness in performing a variety of official fraud-deterrent acts related to the signing of important documents.” The key word in that definition is “integrity.” In order for the public, courts, banks, and other entities to have confidence in the legitimacy of a notarized document, they need to have confidence in the integrity of the notary public who witnessed and attested to the signature(s) it bears. A notary public bond provides a guarantee that the notary public performs their duties in a completely ethical and lawful manner. Who Needs Them? Most states require the purchase of a surety bond as part of the process of becoming commissioned as a notary public. You can contact the Secretary of State’s office in your state and ask whether you will need to obtain...

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Lost Title Bonds

Lost Title Bonds Suppose you bought a car from a private seller, an individual you don’t know very well, and were given a receipt or bill of sales, but no title. How do you register the vehicle without a title? The short answer is: you buy a lost title bond. Learn more about these bonds, and request a quote from Surety Bond Professionals today. What Is It? A lost title bond will enable you to get a bonded title from your state’s motor vehicle department, which will allow you to register the vehicle. The bond is your guarantee that anyone who later shows up and claims a valid, verifiable ownership interest in the vehicle will not suffer a financial loss because you have purchased the vehicle and registered it in your own name. Who Needs It? In the majority of states, anyone who has purchased a vehicle and does not have a valid title for it will need to obtain a lost title bond in order to insure the vehicle, register it in their own name, or sell it. This applies in cases where: The purchaser received no title The purchaser received a title that was lost or stolen...

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Encroachment Bonds

Learn more about encroachment bonds below, and contact Surety Bond Professionals today to request a quote. Our experienced surety agents are ready to help you get the bonds you need. What Are Encroachment Bonds? Encroachment occurs when a private entity wants to place a cell tower, utility pole, fence, billboard, or other “encroachment” on private property adjacent to public property. The contractor hired to do this work must first obtain an encroachment permit, which includes purchasing an encroachment surety bond. While the details vary from state to state, the state’s Highway Department or Department of Transportation typically is the agency that issues encroachment permits and requires the purchase of these bonds. In some states, however, encroachment permits may also be issued by local jurisdictions. An encroachment bond provides a guarantee that the contractor will act in accordance with applicable state and/or municipal laws and regulations when placing the encroachments on the private property. These will be specified in the bond agreement. The bond agreement makes the contractor legally responsible for preserving and protecting adjacent public property. They are also responsible for the cost of repairing any damage or alterations and restoring the public property to its pre-encroachment condition. Who...

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Advance Payment Bonds

In the construction industry, contractors may need a client to make a down payment, also known as an advance payment, to cover the cost of materials or equipment required to initiate a project. In making such a payment, the project owner is exposed to the risk that the contractor will default on the project without returning the amount advanced. That’s where advance payment bonds come in. Learn more about these bonds below, and request a quote from Surety Bond Professionals today. What Are They? An advance payment surety bond is the contractor’s guarantee that the advance will be returned to the project owner if for any reason the contractor becomes insolvent or otherwise fails to meet contractual obligations. The bond protects the client, not the contractor. Advance payments are typically repaid by the contractor through deductions applied to interim (or “progress”) payments from the project owner. These deductions are normally spaced out so that a certain percentage of the advance payment amount is deducted from each payment the project owner makes to the contractor until the entire advance payment amount has been repaid. Who Needs Them? Contractors undertaking projects that require a substantial initial outlay of money often negotiate...

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Health Club Bonds

Learn all about health club bonds, and request a quote from Surety Bond Professionals today! What Are They? Health Club bonds are required by the state as a condition for obtaining a license to operate, which makes them a type of license and permit surety bond. Their purpose is to protect consumers from financial loss due to the illegal actions of a health club. For instance, club members may file a claim against the bond in the event that a health club goes belly up without refunding the balance of membership fees. Who Needs Them? Different states may define “health club” differently. While you may think of a health club as being a facility that offers fitness training, other types of health organizations may also fall under the heading of “health club” in the view of the state where you reside. Any health organization that sells prepaid memberships may be required to purchase a health club bond in order to become licensed or renew an existing license. Health clubs that maintain more than one location may need to purchase a separate bond for each site. How Do They Work? There are three parties that become legally bound together through...

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Money Transmitter Bonds

Learn everything you need to know about money transmitter bonds, and request a quote from Surety Bond Professionals today! What Are They? Money transmitter bonds are a type of license and permit bond, as they’re required in order to become licensed as a money transmitter. Their purpose is to guarantee that the money transmitter will comply with all laws and rules established within the industry to govern the conduct of money transmitters. The bond protects consumers from financial loss resulting from the unlawful or unethical actions of a money transmitter and is essential to maintaining the integrity of the money transmitter industry. The licensing and bonding requirements for money transmitters have become more stringent as digital commerce and online money transfers have become commonplace. Who Needs Them? Laws requiring the purchase of money transmitter bonds are established at the state level and vary from state-to-state—but nearly all states require such bonds. The term “money transmitters” is a broad occupational category that includes online retailers who accept credit card payments, payment processors, and companies that handle wire transfers of funds between individuals or companies—both within the country and across international borders. Consequently, money transmitter bonds are also known as money...

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