Performance bond expiring early

[22ball22]

The City required a $25k performance bond to cut through the street for a sewer connection for my house (because of a failed septic), that was good for one year from the date of the road crossing. They said once they received the bond we could move forward with cutting the road, so the bond was issued and would expire one year from the date it was issued. But then the City held the job up for several months before we were actually allowed to connect to sewer. I've been notified by the company that issued the bond that it will expire in a few days. If I don't pay to renew it for another year they will notify the City. Technically its only been 6 months since the road crossing. The job is complete and there have been no problems with the work. What happens if I just let the bond expire?

[SBPROMIKE]

I would ask the surety company to ammend the effective date to better match the actual start date of the project, however thay may not do this as the effective date should be the start of the permit to perform the work.

If you dont pay the renewal premium, the surety can and will exercise their rights under the indemnity agreement that you signed agreeing to "hold them harmless".

Mike Neschke

[Admin]

Welcome to our forums Mike! Thanks for your input. Feel free to stick around.


Mike is right, about all you can do is ask the surety to change the term of the bond. Unfortunately, it isn't likely they will be willing to do so. You may want to provide proof that the city held up your work, a letter from someone that works for the city if possible.

If they do not agree to amend the term, then you should pay the premium. Otherwise, you will end up paying for the premium and attorney fees they incurred trying to collect the premium from you. The indemnity agreement you signed prior to the bond issuance makes it very hard for you to fight.