Surety Bond

A surety bond is a financial guarantee issued by a surety company that protects the homeowner if the contractor violates the law, misuses payments, or fails to perform the work. Instead of holding progress payments in an escrow account, a contractor can purchase a surety bond to guarantee that the homeowner’s money will be properly applied or returned.

If something goes wrong, the homeowner can make a claim against the bond. The surety pays the homeowner (up to the bond amount) and then seeks reimbursement from the contractor. It’s essentially a safety net that holds the contractor accountable.