Surety Bonds: Payment Bonds

A Payment Bond is usually required as a companion to the Performance Bond. The Payment Bond guarantees that material suppliers and direct labor suppliers will be paid.

Payment bonds guarantee payment of the contractor's obligation under the contract for subcontractors, laborers, and materials suppliers associated with the project. Since liens may not be placed on public jobs, the payment bond may be the only protection for those supplying labor or materials to a public job The Principal’s and Surety’s obligations under the bonds may be determined by statute (“statutory bonds”) or by the wording of the bond itself (“common law bonds”).

Though Payment Bonds are typically separate documents they are issued for no extra charge, when required.