Georgia Construction Bonds

Georgia requires general, residential, and some specialty contractors to be licensed at the state level, which may involve purchasing a contractor license bond as a guarantee of financial responsibility. Local jurisdictions may have their own licensing and bonding requirements.

Under Georgia’s “Little Miller Act,” public project owners (both state and municipal) can require performance bonds and payment bonds for taxpayer-funded construction projects of a certain size. When contracts are awarded through competitive bidding, the contracting authority may also require bid bonds when submitting a bid. Private project owners may also require bid bonds as well as performance and payment bonds. In addition to these, which are the most common Georgia construction surety bonds, both public and private project owners may require other construction surety bonds, such as:

• Maintenance bonds
• Subdivision/site improvement bonds
• Supply bonds
• Solar decommissioning bonds
• Right of Way bonds
• Contractor license bonds

Every Georgia construction bond involves three parties, known as the:

• Obligee—the contracting authority or private project owner requiring the purchase of the bond
• Principal—the contractor who must provide the obligee with the bond
• Surety—the bond’s guarantor

The obligee establishes the required amount of the bond, also known as the bond’s “penal sum.” The principal is legally obligated to pay valid claims against a construction bond, but the surety guarantees their payment. The surety will pay a claim upon verifying its validity as an extension of credit to the principal. The principal must subsequently repay that amount according to the surety’s credit terms. If necessary, the surety can take legal action to recover the debt.