People and businesses who invest in growing the Tampa area’s economy through real estate development are providing valuable opportunities for many.
They have the right to expect that the construction company or other firm hired to do the actual development of real estate will keep their contractual commitments and do so timely and well.
Delays in construction can, after all, at best cost a developer money and time. At worst, they can turn what was a promising economic opportunity into a financial disaster.
After a costly delay, the first option may be litigation or another type of dispute resolution against the firm responsible for it.
However, litigation can be time-consuming and expensive. Also, a lawsuit may do little good if the reason for the delay is that the construction company has encountered financial trouble and could not pay a judgment even if the developer won its case.
Pursuing the surety company is an option after a construction delay
Another option is for a real estate developer to make sure that its construction company of choice has adequate performance and payment bonds in place.
These bonds are often issued in tandem by a financial institution or insurance company.
A performance bond assures the developer that if a construction firm defaults on its contract, the bonding company will either pay damages up to the limit of the bond or will have to arrange to cure the default at the bonding company’s expense.
A payment bond is assurance that the contractor on the project will make sure to pay subcontractors and other valid claims that come along with the construction project.
This type of bond prevents a developer from having to deal with unexpected mechanic’s liens or other money judgements for which it should not be responsible. Again, the bond provides that the bonding company will make good on these claims if the contractor does not.
A developer that is struggling with its construction company may wish to evaluate whether it legally can pursue a claim on a surety bond.