The warranty bond is an assurance by the contractor and the contractor’s surety that the contractor’s warranty obligations will be performed and completed in accordance with the terms of the construction contract. The warranty bond specifically does not extend to warranties provided by the contractor’s suppliers and manufacturers.
The parties should note that Section 2 of the warranty bond sets forth the extent of the bond’s coverage, which is equal to the contractor’s warranty obligations set forth in the construction contract. The parties should carefully review the contractor’s warranty obligations in the construction contract prior to executing the bond. If the contractor’s warranty obligations in the construction contract are non-standard or overly broad, the surety may find it difficult to underwrite the warranty.
Normally, these bond forms are prepared for execution by the surety or the surety’s agent
Parties. The contractor and surety should be identified, along with the owner, the owner’s representative, and the agent or broker. It is especially important that the contractor and surety be identified by using their full legal names and addresses, including the legal status of the parties: sole proprietorship, general partnership, joint venture, unincorporated association, limited partnership, corporation (general or professional), etc. The identification of the owner’s representative and the agent or broker is for information only, since they are not parties to the bond agreement.
Construction Contract. The construction contract should be described by date and by the official name and location of the project as used in the construction contract.
Term of the Bond. The term of the bond is set to a default period of two (2) years, but the parties can modify the bond term in this section if a modification is appropriate.
Bond Amount. The dollar amount of the bond should be in both written and numerical form.
Executing the Bond.
The bond must be signed by the contractor and the surety on the cover page. Additional space is provided on the last page of the bond for the signatures of additional parties. The parties executing (signing) the bond should indicate their company, print their name and title, and impress the corporate seal, if any. Where appropriate, attach a copy of the resolution or bylaw authorizing the individual to act on behalf of the firm or entity. Evidence of authority to sign on behalf of each party should be obtained. As to the surety, this usually takes the form of a power of attorney issued by the surety company to the agent who signs on its behalf.
Modifications. Particularly with respect to professional or contractor licensing laws, building codes, taxes, monetary and interest charges, arbitration, indemnification, format and font size, AIA Contract Documents may require modification to comply with state or local laws. Users are encouraged to consult an attorney before completing or modifying a document.
Reproductions. This document is a copyrighted work and may not be reproduced or excerpted from without the express written permission of the AIA. There is no implied permission to reproduce this document, nor does membership in The American Institute of Architects confer any further rights to reproduce this document. For more information, see the document footer and the AIA Contract Documents® Terms of Service.