Different Types of Surety Bonds
Thursday, November 1st, 2007There are various ways of protecting what is important to you, and what would be unfortunate if lost. One of these ways consists of a form of a guarantee known as Surety Bonds. A Surety Bond is a three-party agreement between one known as the obligee, the principal and the Surety. The issuer of the bond, whether an individual or an institution, joins with the second party which is the principal, in guaranteeing the third party, which is the obligee, that the principal’s obligation is fulfilled.
The obligee is the party to whom the bond is given and in essence protected from potential loss caused by the principal. The principal is the individual who is required to be bonded by the obligee and the Surety is the individual or institution that will guarantee theses acts between the two former parties.
Surety Bonds range in price, costing anywhere from half of one percent to two percent of the contract amount. Even someone with poor credit can get a Surety Bond. A bad credit surety bond can be issued under certain circumstances. A Mortgage Bond is a type of commercial bond required by the government in order to operate as a mortgage broker.
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