The importance of a surety bond cannot be understated in today’s commercial environment. It is more important than ever to have a reliable third party acting as your protection if things don’t go as planned. Without a bonding agent, you may find yourself without a roof over your head and with no vehicle to get to work or meet your clients. On the other hand, if you don’t have a bond, you face massive lawsuits, hefty fines, and in some cases, even jail time. No matter what industry you are in, the bottom line is that you need a surety bond.
What exactly is a surety bond in the legal world? A surety bond is a written agreement that allows a third party to assume responsibility for you if you are unable to. For example, when purchasing a home or taking out a loan, you must sign a contract stating that you will repay the loan if you fall behind. If you don’t comply, the bank can file a lawsuit against you to force you to refund the money.
This form of insurance has been in place for hundreds of years. Today, many people assume that a surety bond protects them from all forms of litigation. However, this isn’t always the case. Surety bonds are primarily used when large businesses enter into agreements or contracts. For instance, when buying or leasing a business, you will often be required to purchase surety bonds to ensure the company won’t default on its obligations. When purchasing or leasing a home, homeowners may also be required to buy a surety bond to assure the lender that they will make their mortgage payment.