What is a Obligee Surety Bond?
Surety Bond for an Obligee
A Obligee Surety Bond is another name for a performance surety bond. The Obligee surety bond is a bond that protects an Obligee from the acts of an Obligor. In many cases, the obligee surety bond is a fiduciary bond, which is a bond that protects based on the acts of an individual. For example, many banks get a fiduciary bond in order to protect themselves from an employee's theft. Generally, these bonds are written on a number of employee basis. That is, the price is based upon having up to a number of employees covered and doesn't name all of the employees, as there could be significant turnover in the bank branch.
In addition an obligee surety bond can cover the obligee in a contractual situation. This situation usually occurs when there is a contract with a specific start and stop date. Take for example, a typical performance bond situation for the building of a restaurant. The owner of the project is the Obligee. The Obligee gets plenty of bids from different contractors to build the restaurant, incluiding a full host of subcontractors to put in the electrical, plumbing, etc. Plus, there are vendors to supply the specialized restaurant equipment that need to be paid. The contractor, who is the Obligor, is required to get the surety bond to protect the Obligee. The surety bond covers the Obligee in case the contractor does not perform according to the terms of the contract, such as not making the electrical up to code. Also, the performance bond can last an additional year after the restaurant is completed, just in case something is not discovered for that year. Finally, there is a payment bond that makes sure that the contractor pays all the vendors and that the subcontractors are paid as well. The Obligee surety bond can then protect the Obligee from any problems that the contractor has during the building of the restaurant.