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Receivership News: An Overview of Construction Bonds in Receivership (Part I)

Summer 2012 Articles

With the economy continuing to stagnate, more construction projects are faltering, ultimately ending up in receivership. When these distressed properties wind up in receivership, it is crucial to be aware of an important asset potentially available to a receiver: the surety bond.

 

As discussed below, there are several types of surety bonds that may be in effect on a given construction project. Enforcing these bonds can add value to the property, ensure completion of the project, and protect the project from claims.  In some circumstances, receivers may be able to directly enforce surety bonds. In other circumstances, receivers may be able to cause others to enforce them.  Either way, enforcing surety bonds may ultimately add value to the property, thereby enhancing returns on the completed project.

 

In the first part of this article, we will discuss the basic types of surety bonds and some elemental aspects of suretyship. In the second part of this article, we will address the surety’s obligations and rights.

View full article here.

Reprinted from the Summer 2012 issue with permission of California Receivers Forum Receivership News.