Commercial and residential construction projects seem commonplace in Florida. The construction of an office building or condominium complex could support tenants moving to the state for economic reasons. Investors might eye these projects as worthwhile long-term investments. Commercial and residential real estate may provide a steady stream of rental income, along with whatever possible equity derives from the value of the property itself. Construction does take time to complete, and delays could arise. A completion bond may prove helpful to investors if the construction company behind the project doesn’t live up to its end of the bargain.
Delays could lead to financial problems for investors
If the construction company building the complex promised a January 1st completion date but June 1st arrives and the building isn’t close to being finished, there’s no space to rent to the public. Hence, there’s no rental income to cover loans or pay any property costs. For investors, things could prove financially disastrous. Filing a claim on a construction-based completion bond might afford the obligee a chance to recover some money through a possible bond payment.
Why would a delay occur?
Construction delays could occur due to any number of reasons. Imagine if the construction company’s top executive was a stellar manager with an impeccable reputation. What happens if that person passes away or suffers medical incapacitation? What if the new team managing the company proves incompetent and can’t complete the project on time? The completion bond may come into play here to provide compensation.
Unfortunately, defaults on completion bonds may occur. In such instances, the obligee might initiate legal action under construction law to recover the claimed compensation.
Completion bonds might provide a financial safety net for investors putting money into construction projects. A project may end up delayed due to many unexpected reasons, which is why some find value in these bonds. Attorneys who handle construction law cases might initiate legal action when a bond claim isn’t paid.
