Advance Payment Bonds
Advance payment bonds are provided by a contractor and meant to guarantee the settlement or return of any advance payments (down payments) in the event that a job is not completed per the terms of the contract. Sometimes known as “advance payment guarantees” or “advance stage payments,” these bonds are often used by foreign buyers or developers to protect their deposits in case the contractor is unable to comply with the terms or performance of the contract, but they can also pertain to money advanced for the purchase of supplies and materials. In the case of the latter, the bond may be payable if the materials are found to be faulty or defective.
This type of construction surety might also be required by the client if the contractor requests a deposit in order to meet significant startup costs or procurement costs, such as might be required prior to the start of a major or high-end construction job. This construction bond protects the buyer in case the contractor becomes insolvent or is unable to finish the job for any reason. Most advance payment bonds are pay-on-demand, meaning that the bond company is required to pay out immediately without any precondition or breach of contract.
Request an Advance Payment Bond Quote
For more information on this type of surety, call us today to set up a consultation. One of our contractor bond specialists will be happy to answer any questions you might have.