Surety Bond

A surety bond is a type of contract that involves three parties: the principal, the obligee, and the surety. It is designed to provide financial protection to the obligee in case the principal fails to fulfill certain obligations or commitments.

Here's how the parties are defined in a surety bond:

1. Principal: The principal is the party that obtains the surety bond. It can be an individual or a business entity that has specific obligations or responsibilities to fulfill. The principal is required to purchase the surety bond to guarantee their performance or compliance with the terms of a contract, law, or regulation.
2. Obligee: The obligee is the party that requires the principal to obtain a surety bond. This can be a government agency, a private company, or any entity that wants assurance that the principal will fulfill their obligations. The obligee is the beneficiary of the surety bond and can make a claim against it if the principal fails to meet their obligations.
3. Surety: The surety is a third-party entity, typically an insurance company or a bonding company, that provides the surety bond. The surety is financially responsible for fulfilling any claims made by the obligee in case the principal defaults or fails to meet their obligations. If a claim is valid, the surety will initially pay the obligee, but then the principal must reimburse the surety for the amount paid.

Surety bonds are commonly used in various industries and situations. They serve as a guarantee of the principal's performance, financial responsibility, or compliance with legal requirements. Some examples of surety bonds include construction bonds, license and permit bonds, fidelity bonds, and court bonds. The specific terms, conditions, and coverage of a surety bond can vary depending on the type of bond and the agreement between the parties involved.

Common bonds we provide include locality/governmental required bonds for construction and TxDMV Bonded Title for vehicles purchased without a title.