What is a Montana Contract Bond?
The State of Montana requires individuals or business entities to furnish this type of bond to ensure faithful completion of a contract in a manner that is approved by the obligee or the owner of the construction project. It is also needed to protect the obligee or compensate the obligee if needed.
This surety bond is also deemed as a Construction Bond.
It is important to note that both private and government construction projects require a surety bond. In the case of government construction projects, the federal Miller Act requires that a bond is secured for projects exceeding the amount of $100,000.
The following are the 3 key parties of a Contract Bond:
– The contractor who will be obtaining the bond from the surety bond company
– The owner of the construction project to whom the bond is obtained
– The surety bond company will shoulder the payment to the obligee in case the principal doesn’t fulfill his obligations
The Different Types of Contract Bonds
A Contract Bond is subdivided further into different types. The primary contract bonds used in a construction project are as follows:
The surety guarantees the obligee that the principal will fulfill his contractual duties. If the principal fails to do so, the surety will pay the obligee the performance cost’s excess amount.
In most states, a payment bond is referred to as the Little Miller Act. The surety assures the obligee that the principal’s construction workers, suppliers, and subcontractors will be paid.
A type of surety bond where the surety guarantees the obligee or the construction project owner that the principal will execute the contract awarded to him/her.
In the case of non-compliance or if the principal abandons the project, the surety guarantees the construction project owner that he or she will be paid for the difference between the principal’s bid and the lowest amount the contract may be awarded.
Other Types of Contract Bonds
A guarantee that the necessary supplies needed for the construction project will be delivered on time.
A warranty that will cover any defective materials used in the project or substandard workmanship for a period of one year after the project’s completion.
A guarantee that the subcontractor will fulfill his contractual obligations to either the prime contractor, the obligee, or both.
What is the Montana Contract Bond amount?
The amount of the surety bond and the conditions will depend on the full amount of the contract and the type of surety bond.
The Bid Bond amount is usually 5% up to 10% of the full contract amount.
Performance bond amount, on the other hand, starts at 2.5%, while a Payment Bond’s minimum amount is 3% of the contract amount.
Secure your FREE quote for your project today, get it here!
How do I secure a Montana Contract Bond?
STEP 1: Determine the kind of bond that your client requires. Once you have established that, you must submit a bond application.
STEP 2: The next step would be the underwriting process. An underwriter will evaluate pertinent information such as your construction company history, financial history, and credit score.
STEP 3: Once done, we will execute the bond and send it to you immediately.
If you’re ready to get started on this bond, don’t hesitate to give us a Call.