Jhannise08, Home Buyer in West Los Angeles, Los...

What does a bond mean when in regards to a builder?

Asked by Jhannise08, West Los Angeles, Los Angeles, CA Tue Feb 9, 2010

I'm considering buying a new construction and the condo is 750k, which is reasonable for the market. When running a search, their bond is only for 12,500. This seems quite low, but I'm not sure how to correctly read this information. I know there is a guarantee on the roof and floors from the builder- is this capped at 12,500 or what?

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A contractors bond is required by the CSLB in case a contractor defaults on his contractual obligations by violating contractors law a "homeowner" is able to file a claim up to $12,500.00 to reimburse any losses or to 'help' complete the project. By law surety is to be neutral in an investigation however the surety seems to side with 'homeowners' and make easy payouts due to the fact that a contractor will have his license suspended until reimbursing the surety makes it easy for the investigator to make payout determinations by knowing this.

The benefit is mostly designed for homeowners however the benefits does not cover any property that is in a sales transaction. If the work was done for a bank or broker to quickly fix up the place for a sale they cannot file a claim.

The contractor rarely gets a fair and unbiased investigation due to the fact that most surety investigators have never been on a construction project and are only trained in violations of the basic license laws and are not educated in defense laws the fact is they sit at a desk making crucial determinations without full knowledge of California Contractors laws.

On a new construction you only have a CSLB warranty, under the law the contractor must warranty his work for four years, foundation and structural is ten years, even if he goes out of the contracting biz however what if he files BK or passes you have nothing.

The bond also covers employees, sub contractors, and suppliers that the contractor fails to pay. Even if you paid the cprimary contractor if he fails to pay his workers, subs or suppliers, they have a legal right to place a mechanics lein on your property and force a sale to get paid.

My ad vice, look into some additional insurances or warranty plans.

TP
0 votes Thank Flag Link Tue Feb 9, 2010
No the bond pays to finish the condo if they leave without finishing the job.


http://www.realtor-consultant.com
0 votes Thank Flag Link Tue Feb 9, 2010
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