Surprisingly, the answer is no. The surety’s first responsibility is to make good on the bonds issued. They have to deal with their obligations related to the performance and payment bonds. Their second responsibility is to conserve the assets of their surety. They actually have no obligation to finance any contractor. They may do so if it is in the best interest of your surety to meet it’s obligation and or conserve assets.
Normally, a surety’s interests and a contractor’s interests are one and the same. The surety normally understands and uses the defenses and rights the contractor might have to any potential claim. Generally, the surety will do well if the contractor does well, so the surety should have a relationship that encourages the profitability of the contractor. There are times, such as contractor financing, where the goals of the contractor and the surety might not be the same. It is good to understand how a surety might react under different circumstances. If you have questions about your surety relationship, feel free to give us a call.