If you are in the process of building a contract with another person or a company, you might be asking “what exactly is a surety bond?” A surety bond, in its simplest terms, is a contract between at least three parties: the obligee, the principal, and the surety.
1. The obligee (such as a bank) is the recipient of an obligation, or the fulfillment of a contract.
2. The principal (such as an individual) is the primary party who is to perform the obligation, or fulfill the contract.
3. The surety (such as a bonding agency) is the party that assures that the principal can perform the agreed-to task.
The purpose of a surety bond is to provide credibility to the principal. For example, if you are applying for a loan from a bank, you would be entering into a contract with that bank. In this example, you are the principal, and the bank is the obligee. The bank may not believe that you have sufficient income or assets to pay back the loan. So you find a bonding agency that sells surety bonds. The bonding agency (now the surety) will back you up, telling the bank that you are capable of repaying the loan. You will pay the bonding agency a premium, in exchange for this back-up. If you fail to repay the loan, the bonding agency will repay it for you. With the support of a bonding agency, the bank will feel confident that you will repay the loan, and give you the desired loan.
This can also be applied to bail bonds, where a bonding agency ensures the courts that you will pay your bail.
How Do I Get A Surety Bond?
You, as the principal, will need to purchase a surety bond from a bonding agency, which would act as your surety. You pay for the bond, and the agency steps in and supports your contract with the obligee. A bonding agency will often run a credit check and verify you income and assets, so be prepared to give this information.
Where Do I Find A Binding Agency?
If you need a surety bond, simply submit a service request with TalkLocal. Just tell us your what you need, where you are, and when you are available, and we will connect you with up to three bonding agencies in your area who will be able to help you out. Our service is fast, easy, and free!
