Secure Your Texas Performance Bond
Ensure your project meets expectations: Construction Performance Bonds offer financial protection and compliance, guaranteeing project completion.
Texas Performance Bond
Your Trusted Partner for Notary Bonds in Texas
TMD Surety Bonds is your local Texas surety bond agency. Since our establishment in 2011, we have helped thousands of customers with their bond needs. Our clients know they can count on our attentive customer service, surety bond mastery, and price transparency.
What Is a Performance Bond?
A Performance Bond is a financial guarantee provided by a bank or an insurance company to ensure that a contractor fulfills their obligations in a contract. It serves as a safeguard against the failure of the other party to meet their contractual duties. These bonds are commonly used in construction and real estate development to assure completion of designated projects.
Why is a Performance Bond Required in Texas?
In Texas, a Performance Bond is required to ensure that a contractor fulfills all obligations of a contract. It protects the state or governmental entity awarding the contract, ensuring the faithful performance of the work in accordance with the plans, specifications, and contract documents.
Who Needs a Performance Bond?
A Performance Bond is a crucial requirement for certain parties involved in a contract. It provides a financial guarantee for the completion of contractual obligations. Here’s who typically needs a Performance Bond:
- Contractors
- They are responsible for completing the work as required by the contract.
- Project Owners/ClientsÂ
- They are the recipients of the completed work.
- Subcontractors/Suppliers
- They may also be required to provide performance bonds.
- Lenders
- They may require performance bonds as a condition of financing for the project.
How Do Performance Bonds Work in Texas?
In Texas, a Performance Bond is a financial guarantee that a contractor will complete a project as per contract standards. If the contractor fails, the bond covers project delays and cost overruns1.
Parties involved in a Performance Bond are:
- Contractor
- Responsible for completing the work as per the contract.
- Project Owner/ClientÂ
- Recipient of the completed work.
- Surety Bond Company
- Provides the financial guarantee through the Performance Bond.
- Subcontractors/Suppliers
- May also be required to provide Performance Bonds.
How to Get a Performance Bond in Texas
Effortlessly secure your performance surety bond in three simple steps! Experience the reliability and convenience of our hassle-free surety bond process.
How Much Does a Performance Bond Cost in Texas?
The cost of a Performance Bond in Texas is a small fraction of the bond value, providing affordable security for contract fulfillment. For clients that are just needing bonding as a one off, the rate will be 3% of the contract amount. Here’s a breakdown for clients who need bonding on a regular basis:
- For contracts under $1,000,000, the cost is 3% of the total bond amount.
- For contracts between $1,000,000 and $1,500,000, the cost ranges from 2-3%.
- For contracts over $1,500,000, the cost is between 1.5-3%.Â
These rates are for clients with good credit. Rates may be higher for those with poorer credit. This cost structure ensures value for money, providing a financial guarantee for a small percentage of the contract value.
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Texas Performance Bond FAQ
In Texas, performance bonds are required for public work contracts exceeding $100,000. The bond must be executed before work begins.
A performance bond typically remains active until the job is completed, or until either party cancels it in writing.
Obtaining a performance bond typically takes between 24-72 hours.
Yes, it’s possible to get a performance bond with bad credit. However, it may require a different approach or use of programs like the SBA program.
A payment bond ensures that subcontractors and suppliers will be paid, while a performance bond guarantees that the contractor will fulfill their contractual obligations.
To avoid performance bond claims in Texas, be proactive, maintain good communication with the surety, and consult with an attorney specializing in contract bonds. Making sure all the obligations of the contract is a good way to ensure a claim will not be filed. Â
Need a Performance Bond? Have Questions?
The bonding process can be confusing and cumbersome. Our surety bond experts are standing by and ready to answer any questions. Let’s get you bonded today!