Most project owners and developers have every hope that their big construction project will go well.
To do so, they will likely have a vigorous vetting process to make sure that they are relying only on quality contractors and subcontractors that will get the job done efficiently and correctly.
Unfortunately, despite their best efforts, sometimes construction projects do get marred by a contractor or subcontractor which does not perform as agreed.
In other situations, contractors may not pay their employees or leave other bills unpaid, and these debts ultimately fall back to the landowner or developer.
While situations like these can be the mark of dishonest business practices, many times, it is just part of the realities of economics.
Owners and developers should be sure their interests are protected
This is why owners and developers should make sure that their interests are properly protected in the event of a construction dispute involving a contractor. The construction contract itself is a good means by which a developer can accomplish this.
In the contract, for example, the developer can be sure that its contractors have important insurance coverages in place that could pay any claim resulting from a contractor’s mistakes.
It can also set safeguards to make sure that a contractor’s work complies with the law and other important industry standards.
A developer may also strongly consider asking its contractors for a surety bond from a bank or insurance company.
In general, a bond is a promise from the bank or insurance company that if a contractor fails to perform or meet other important responsibilities, including financial obligations, then the surety will step in and either correct the problem or pay up to the amount of the bond.
Surety bonds are separate legal agreements. As such, detailed questions about this option may be better referred to an experienced construction law attorney.