You want to add onto your house and you've researched a variety of contractors to do the work for you. You are concerned about how much your project is going to cost and whether or not the chosen contractor will show up and complete the work.
Never fear, if you pursue a bid bond from each potential contractor, you are protected by law to have your work completed. Learn what a bid bond is and how having this added precaution done will protect and benefit you.
What a bid bond is
A bid bond is a contract bid presented by the contractor to you, the homeowner. A bid bond is a legally binding bid that the chosen contractor, once given the work, has to abide to. The bid bond provides protection for you as a homeowner in the event the bidding contractor goes over the budget they assigned your project and also ensures that if the work is not completed due to lack of funds (not your fault, since the bid for the work was given to you, not the other way around), you can recoup your money or sue to have the work completed without paying more.
How a bid bond benefits you
Many contractors will provide low, almost impossibly profitable bids to homeowners in the hopes of luring business. Once a bid is accepted, the homeowner quickly discovers that the project is actually more expensive than the contractor portrayed, and the homeowner is left having to pay more money to complete their home project, or risk having the addition abandoned because the contractor will not pay out of pocket for the excess fees.
Not every contractor will put themselves in a situation where their bid is too low to complete a project successfully. However, a bid bond will require the contractor to not only complete the project charging you only the bid the agreed to, the bid bond requires the contractor to finish the project they've contracted themselves to with you, regardless of any potential excess costs.
A bid bond is usually filed with an attorney or insurance company and must be honored by both parties. This means you also have to abide by your end of the deal by paying the fees agreed upon by the date they are to be delivered. If you have any questions about how a bid bond works in your state, contact your insurance company.Share