Massachusetts Maintenance Bonds

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Surety Bond Professionals is a family owned and operated bonding agency with over 75 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your maintenance bond needs.

What Are Massachusetts Maintenance Bonds?

A Massachusetts maintenance bond guarantees that the contractor who purchased it (the bond’s “principal”) will address any defects in materials or workmanship that only become apparent after the completion of a construction project. The bond legally obligates the principal to remediate defects that surface during the bond’s coverage period and to do so at no cost to the project owner (the bond’s “obligee”).

A contractor who does not correct a covered defect is legally obligated to pay the obligee’s claim for the cost of having it repaired by someone else. A third party (the “surety”) guarantees the payment of valid claims up to the full bond amount.

Who Needs Them?

There is no statutory requirement in Massachusetts for maintenance bonds on public works projects. Nevertheless, some state or municipal contracting officials may require a maintenance bond as a mandatory condition for entering into a public works contract. Private construction project owners may also choose to protect themselves and their investors by imposing the same maintenance bond requirement.

How Do Massachusetts Maintenance Bonds Work?

In approving an applicant for a maintenance bond, the surety is agreeing to extend credit to the principal when a valid claim needs to be paid. In practice, when the obligee submits a valid claim, the surety will pay it on the principal’s behalf and give the principal some time to repay the resulting debt. Failing to repay the debt in accordance with the surety’s credit terms typically results in the surety taking legal debt recovery actions.

How Much Do They Cost?

Two factors go into the calculation for the premium cost of a Massachusetts maintenance bond—the bond amount and the premium rate. The bond amount is based on the contract price. The premium rate is assigned by the surety based on an assessment of the risk of not being repaid for claims paid on the principal’s behalf. The underwriters use the principal’s personal credit score as the measure of this risk.

A high credit score is proof of a low risk, which translates into a low premium rate. A low credit score, on the other hand, means the risk is higher and must be offset by a higher premium rate.

A well-qualified principal typically will be assigned a premium rate in the range of .5% to 3%.

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