North Dakota Construction Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about North Dakota construction bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

What Is a North Dakota Construction Bond?

North Dakota construction bonds are surety bonds that protect the owners of public works or private construction projects from the monetary losses that can occur when contractors fail to live up to their regulatory or contractual obligations. They not only require contractors to comply fully with applicable statutes and the terms of the construction contract. They also obligate contractors to pay valid claims losses resulting from their noncompliance.

What Types of North Dakota Construction Bonds May Be Needed?

In North Dakota, general contractors and certain types of specialty contractors are licensed at the state level. But, only specialty contractors must furnish contractor license bonds to the specific state licensing authority. General contractors and specialty contractors alike may be subject to local licensing and bonding requirements as well.

North Dakota’s “Little Miller Act,” the state’s version of the federal Miller Act, is formally referred to as the Mechanics’ Lien Statute. It requires contractors awarded state-funded projects with a value in excess of $100,000 to furnish both performance bonds and payment bonds, each for 100% of the contract value.

Private construction projects aren’t subject to the Little Miller Act. Still, private project owners can also require performance and payment bonds from their contractors. And both private and construction project owners may make the provision of a bid bond by each contractor a condition for bidding on a job.

Other construction bonds that contractors operating in North Dakota may need include:

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

How Does a North Dakota Construction Bond Work?

Every construction bond is a legally binding agreement among three parties referred to as the:

  • obligee—the project owner requiring the bond,
  • principal—the contractor purchasing the bond, and
  • surety—the party guaranteeing the bond.

The surety will investigate claims upon receipt and determine their legitimacy. If a claim is found to be valid, the principal is legally obligated to pay it. At the time a construction bond is purchased, the surety agrees to extend credit to the principal if it becomes necessary to pay a claim. In fact, the surety will actually pay the claimant on the principal’s behalf. The principal then must repay the resulting debt. Not doing so will most likely cause the surety to take legal action to recover the debt.

How Much Does It Cost?

Construction bonds are subject to underwriting to assess the risk of the surety not being repaid for claims paid on the principal’s behalf. The applicant’s personal credit score is the accepted measure of that risk and the key factor in setting the premium rate.

A high credit score is evidence of the principal’s financial responsibility and low risk to the surety. Low risk merits a low premium rate. A low credit score is a red flag for risk, which warrants a higher premium rate.

The premium rate for a principal with good credit usually is in the range of 1% to 3%.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about North Dakota construction bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

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FREE CONSTRUCTION BOND QUOTE

What Is a North Dakota Construction Bond?

North Dakota construction bonds are surety bonds that protect the owners of public works or private construction projects from the monetary losses that can occur when contractors fail to live up to their regulatory or contractual obligations. They not only require contractors to comply fully with applicable statutes and the terms of the construction contract. They also obligate contractors to pay valid claims losses resulting from their noncompliance.

In North Dakota, general contractors and certain types of specialty contractors are licensed at the state level. But, only specialty contractors must furnish contractor license bonds to the specific state licensing authority. General contractors and specialty contractors alike may be subject to local licensing and bonding requirements as well.

North Dakota’s “Little Miller Act,” the state’s version of the federal Miller Act, is formally referred to as the Mechanics’ Lien Statute. It requires contractors awarded state-funded projects with a value in excess of $100,000 to furnish both performance bonds and payment bonds, each for 100% of the contract value.

Private construction projects aren’t subject to the Little Miller Act. Still, private project owners can also require performance and payment bonds from their contractors. And both private and construction project owners may make the provision of a bid bond by each contractor a condition for bidding on a job.

Other construction bonds that contractors operating in North Dakota may need include:

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

Every construction bond is a legally binding agreement among three parties referred to as the:

  • obligee—the project owner requiring the bond,
  • principal—the contractor purchasing the bond, and
  • surety—the party guaranteeing the bond.

The surety will investigate claims upon receipt and determine their legitimacy. If a claim is found to be valid, the principal is legally obligated to pay it. At the time a construction bond is purchased, the surety agrees to extend credit to the principal if it becomes necessary to pay a claim. In fact, the surety will actually pay the claimant on the principal’s behalf. The principal then must repay the resulting debt. Not doing so will most likely cause the surety to take legal action to recover the debt.

Construction bonds are subject to underwriting to assess the risk of the surety not being repaid for claims paid on the principal’s behalf. The applicant’s personal credit score is the accepted measure of that risk and the key factor in setting the premium rate.

A high credit score is evidence of the principal’s financial responsibility and low risk to the surety. Low risk merits a low premium rate. A low credit score is a red flag for risk, which warrants a higher premium rate.

The premium rate for a principal with good credit usually is in the range of 1% to 3%.

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Request a quote online or call today to speak with one of our surety bond experts about obtaining a North Dakota construction bond.