Obtaining a bond for an LLC

[Anonymous]

I'm engaged as an owner's representative in a large scale real estate development project. Our permits require a performance bond for construction in the name of the permit applicant. The bond is supposed to name the lead permitting agency the obligee. The permit applicant facing this requirement is an LLC set up specifically for this deal - call it Company A, LLC.

Company A, LLC is actually a joint venture between 1) Company B, LLC and 2) Company C, LLC. Under company A's (J/V) operating agreement, Company B is required to obtain all bonding and insurance.

My first question is:
How does Company B (which currently holds the asset, and the obligation to bond and construct) obtain a Performance Bond with Company A's name on it as the Principal?

And my second (unrelated) question is:
Is there any difference between a Performance Bond vs. a Surety Bond? The permitting agencies seem to think they have better protection with a surety bond. I always thought they were the same thing - i.e. a performance bond is simply a type of surety bond. The bottom line is that the permitting agency wants 100% control of "who and how" the job is completed in the event the bond is called.

Thanks for any help you can offer. This situation has been a tricky one for both sides of the table...

[Admin]

Not a problem. The bonding company can use the financial strength of company A, B, or C and require indemnification of all if needed.

A performance bond is a type of surety bond. You can read more about general bond information on our Surety Bond Blog.