Surety Bond News

The “Building Contractor-Surety Relationships: Part 1” article focused on what surety companies look for when they are considering writing contract bonds for a contractor. In this article, we will delve in to ways to build up a contractor-surety relationship once a contractor gets their foot in the surety bond door.
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New York legislators have re-adopted regulations to implement AB 6924 (2009). The New York Banking Department now requires mortgage loan originators to obtain a surety bond. Should the originator be an employee or exclusive agent of an originating entity subject to the present surety bond requirements, then the employer’s bond could be utilized to meet the requirement. The current law requires mortgage brokers to obtain a bond ranging from $10,000 to $100,000 calculated by loan application volume; under the new bill they must acquire a bond ranging from $50,000 to $500,000, which is calculated by the volume of New York closed loans. AB 6924 states that the Superintendent has the ability to require a larger bond if the “nature or business of a [mortgage loan originator] or originating entity requires in the reasonable judgment of the Superintendent such additional protection for consumers.”

The construction industry is ever changing. One constant in construction is the importance of understanding how surety companies decide whether or not to provide contract bonds. Most contractors that have been in businesses for a while have likely been turned down for a desired project that they viewed themselves as being worthy of. Surety companies aren’t the enemy, when they decline a contractor for a job there’s good reason behind it. In the end the surety wants to ensure that the contractor is successful in the long term while building a sound business relationship; that may mean turning them down when they see fit.
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Employers in the state of Pennsylvania must abide by new rules that were recently put in place. The Pennsylvania Department of Labor and Industry has changed the regulations for the contributions employers make towards employee benefits. Previous regulations stated that the required surety bond amount must be equal to 1% of the employer’s taxable wages paid for employees for the most recent four calendar quarters prior to the employer’s election to make such payments in place of making contributions. The new regulations require the bond to guarantee the compensation of the benefit payments which are calculated by the wages paid during the employer’s period of electing to make payments in place of contributions; the Pennsylvania Department of Labor and Industry will establish the bond amount required.

Oklahoma State has revised requirements currently in place regarding water supply construction permits. The Oklahoma Department of Environmental Quality has adopted modified regulations for public water supply construction which requires suppliers to obtain a performance bond or another form of guarantee to protect against equipment failure. The surety bond must be payable to the permittee in a quantity equivalent to the contract price for installation/equipment including an additional ten percent. The bond must be active for one year after the equipment is operating as oppose to the previous requirements which required the bond to be active for five years.