Maintenance Bonds

In today's economy, making sure that you get the most for your money is an important consideration. Making every penny count is especially critical when it comes to home improvement, considering that the current real estate market is extremely tight. Having amenities that another house does not will give you the edge when it comes to selling your house, but since home prices are at a relative low right now, every dollar you spend during the improvement process directly impacts the amount you'll be walking away with after closing.

A maintenance bond, which is a type of surety bond, can ensure that you're getting the most for your money during a renovation. These bonds are usually required after the completion of a construction project to guarantee the work that was done correctly and without defect. The maintenance bond protects against design defects, workmanship faults, and other such issues that stem from problems during the construction process. Should there be such an issue with any component of the project and a claim is filed against the bond, the bond company will ensure that the work is remedied either by the contractor or another individual, or that appropriate financial compensation is received.

The contractor is generally responsible for purchasing the bond, and they do so through a bond company or, occasionally, an insurance company (though surety bonds are not a form of insurance). The price of the bond will be subject to the contractor's credit score and financial health, and the bond company will evaluate each to make sure that the contractor can pay the face value of the bond should there be a claim against it. If the contractor has subpar credit, he or she will have to purchase the bond from a company specializing in bonds for those with poor credit which will increase the cost of the bond.

Maintenance bonds are taken out for a limited time and, after they expire, the workmanship is no longer under any guarantee. Since maintenance bonds are only effective for a limited time and are specifically for defects stemming from the construction itself, they're obviously not a good substitution for other maintenance plan or insurance. However, they can provide peace of mind for the term of the bond and, since many construction issues are apparent after a short time, should protect against the vast majority of construction faults and problems for most projects.