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Warranties and Bonds

Written and maintained by SynC.

Rev4
IssuedOct 12, 2026
LicenseCC BY 4.0
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1 Scope

NOTE This standard establishes the administrative requirements for the Contractor's correction period and general warranty, for the special and extended warranties the product standards require, and for the surety bonds furnished on the Work, on any project and under any Division of the Specifications. (1.1)
NOTE A product standard states what is warranted and for how long. This standard states how that warranty is written, who signs it, when it starts, how a claim under it is made and answered, and what the Owner does when it is not. Writing those procedures once, here, keeps every product standard to the terms unique to its product and keeps the procedures from drifting apart between sections. (1.2)
NOTE The bonds and the correction period originate in the Agreement and the General Conditions, which are contract instruments, not specifications. This standard carries their requirements into the project manual so that the subcontractors and suppliers who read only the technical sections see the obligations that flow down to them, and it states the administrative detail those instruments leave open. (1.3)
1.4 The Contractor shall comply with this standard in addition to any warranty or bond requirement stated in a product standard.
1.5 Where a product standard requires a special or extended warranty, this standard shall govern the form, signatories, execution, submittal, claim procedure, and enforcement of that warranty unless the product standard states a more stringent requirement for its product.
1.6 Where a requirement of this standard conflicts with the Agreement or the General Conditions, the Agreement and the General Conditions shall govern.
NOTE The following are outside the scope of this standard: (1.7)
  • The warranty type, term, and coverage scope of a particular product, which the governing product standard states, such as the manufacturer's system warranty under Membrane RoofingMembrane RoofingResolves to the current adopted revision.sync/membrane-roofing
  • The substantial completion inspection, the punch list, final payment, retainage, lien waivers, and the submission of the consent of surety at final payment, which Closeout ProceduresCloseout ProceduresResolves to the current adopted revision.sync/closeout-procedures governs
  • The content, organization, and delivery format of the operation and maintenance manuals, which Operation And Maintenance DataOperation and Maintenance DataResolves to the current adopted revision.sync/operation-and-maintenance-data governs and into which the warranty book is bound
  • The submittal register, the transmittal and review workflow, and the action and informational classification of submittals, which Submittal And Quality ProceduresSubmittal and Quality ProceduresResolves to the current adopted revision.sync/submittal-and-quality-procedures governs
  • Testing, inspection, mockups, and quality control during construction, which Quality RequirementsQuality RequirementsResolves to the current adopted revision.sync/quality-requirements governs
  • Builder's risk, general liability, and other insurance, and the certificates of insurance, which the Agreement and the General Conditions govern

2 Warranty and Bond Terms

NOTE The following terms are used in this standard with the meanings given here: (2.1)
  • The correction period is the fixed period after substantial completion during which the Owner has the specific right to require the Contractor to correct Work found not to conform to the Contract Documents, and it is a remedy, not the full extent of the Contractor's obligation
  • The general warranty is the Contractor's undertaking that the materials and equipment are new and of good quality, that the Work is free from defects, and that the Work conforms to the Contract Documents, and it is enforceable until the statute of limitations or repose runs, not merely until the correction period ends
  • A special warranty is a warranty on a particular product or assembly, issued by the manufacturer, the installer, or both, on terms a product standard requires and which exceed the general warranty in term, in scope, or in both
  • A performance bond is a surety's undertaking that, if the Contractor defaults, the surety completes the Work or pays the Owner, up to the penal sum
  • A payment bond is a surety's undertaking that subcontractors, sub-subcontractors, and suppliers who furnish labor or material to the Work are paid, up to the penal sum
  • A maintenance bond is a surety's undertaking that defects in the completed Work are corrected during a stated period after substantial completion, up to the penal sum
  • A bid bond is a surety's undertaking that the bidder, if awarded the Contract, enters into it and furnishes the required bonds, failing which the Owner recovers the difference between that bid and the next, up to the penal sum
  • The penal sum is the maximum amount the surety is obligated to pay under a bond, stated as a percentage of the Contract Sum or as a fixed amount
  • The surety is the company that issues the bond, and the attorney-in-fact is the individual the surety has authorized by a power of attorney to execute bonds on its behalf
  • A consent of surety is the surety's written agreement that a payment the Owner is about to make, such as final payment or a reduction in retainage, does not release the surety from the bond
  • A no-dollar-limit warranty is a manufacturer's warranty with no cap on the cost of covered repairs over its term, as distinct from a material warranty or a warranty with a stated dollar limit

3 Referenced Standards

3.1 The warranties, bonds, and their administration shall comply with the latest adopted edition of each of the following unless a specific edition is cited or the Contract Documents direct otherwise.
3.2 Where referenced documents conflict, the more stringent requirement shall govern unless the Engineer of Record directs otherwise in writing.
Standard Title
AIA A201 General Conditions of the Contract for Construction
AIA A312 Performance Bond and Payment Bond
AIA G707 Consent of Surety to Final Payment
AIA G707A Consent of Surety to Reduction in or Partial Release of Retainage
EJCDC C-700 Standard General Conditions of the Construction Contract
EJCDC C-610 Performance Bond
EJCDC C-615 Payment Bond
ConsensusDocs 200 Standard Agreement and General Conditions Between Owner and Constructor
ConsensusDocs 260 Performance Bond
ConsensusDocs 261 Payment Bond
40 U.S.C. 3131 to 3134 Miller Act
FAR Part 28 Bonds and Insurance
FAR 52.228-15 Performance and Payment Bonds, Construction
FAR 52.246-21 Warranty of Construction
31 CFR Part 223 Surety Companies Doing Business with the United States
Treasury Department Circular 570 Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies
Standard Form 24 Bid Bond
Standard Form 25 Performance Bond
Standard Form 25A Payment Bond
NOTE The federal Miller Act governs bonds on federal construction contracts, and every state has a public works bonding statute, often called a Little Miller Act, that governs bonds on state and local public work. The statutes differ in the contract value above which bonds are required, in the penal sum of each bond, in who is entitled to claim on the payment bond, and in the notice and suit periods for a claim, and the state statute is what controls on state and local work regardless of what a form bond says. (3.3)

4 Submittals

4.1 Bond and Warranty Form Submittals

4.1.1 The Contractor shall submit the following before the Contract is executed, or within the time the Agreement allows for furnishing bonds, and no payment shall be made on the Contract until the bonds have been received and accepted:
  • Each bond required by this standard, executed by the Contractor and by the surety's attorney-in-fact, on the bond form indicated in the datasheet
  • The power of attorney under which the attorney-in-fact executed each bond, dated not earlier than the bond and bearing the surety's seal
  • Evidence that the surety holds a certificate of authority to transact surety business in the state of the project
  • Evidence of the surety's Treasury listing and underwriting limitation, where Treasury listing is required, and of its financial strength rating and financial size category, where a minimum is indicated in the datasheet
  • A sample of each warranty form the Contractor proposes to use for a special warranty, where the datasheet does not require the Owner's form
Bond and Warranty Form Submittals Requiredcheckbox
☑ Executed bonds on the indicated form
☑ Surety power of attorney with seal
☑ Surety certificate of authority for the project state
☑ Surety Treasury listing, rating, and size category evidence
☐ Sample special warranty forms
4.1.2 Bond and warranty form submittals shall be transmitted and tracked through the submittal procedure of Submittal And Quality ProceduresSubmittal and Quality ProceduresResolves to the current adopted revision.sync/submittal-and-quality-procedures.
NOTE A bond executed on a form other than the one the Contract Documents require, or executed by an attorney-in-fact whose power of attorney does not cover the bond, is the defect that surfaces when the Owner tries to claim on it. Reviewing the power of attorney and the form at contract execution, when the Contractor still needs the first payment, is the point at which the correction costs nothing. (4.1.3)

4.2 Closeout Warranty Submittals

4.2.1 The Contractor shall submit the following as the warranty book, assembled and delivered under the Warranty Book at Closeout section of this standard:
  • The Contractor's general warranty, executed and stating the commencement and expiration dates of the correction period
  • Each special warranty required by a product standard, executed by the warranting party and countersigned as this standard requires, stating its commencement and expiration dates
  • A written statement, with each special warranty, of the maintenance the warranting party requires to keep coverage in force and of the conditions that void coverage
  • The warranty log indexing every warranty on the project
  • The maintenance bond, where required, executed by the Contractor and the surety
Closeout Warranty Submittals Requiredcheckbox
☑ Contractor's general warranty with dates
☑ Executed special warranties with dates
☑ Maintenance conditions statement for each special warranty
☑ Warranty log
☐ Executed maintenance bond

5 Correction Period and General Warranty

5.1 Correction Period Distinct from Warranty

NOTE The correction period and the general warranty are two different things that are routinely confused into one. The correction period is a specific remedy: for a fixed time after substantial completion the Owner can require the Contractor to come back and correct nonconforming Work, without first proving a breach or hiring others. The general warranty is a promise about the quality and conformance of the Work that does not expire when the correction period does, and a defect found in year three is still a breach of it, enforceable through the dispute resolution provisions of the Contract until the statute of limitations or repose runs. The standard general conditions make this explicit by stating that the correction period is not a limitation on the time for enforcing the Contractor's other obligations. (5.1.1)
NOTE The confusion has a cost in both directions. An Owner who reads the one-year correction period as the whole warranty writes off defects it is still entitled to have corrected. A Contractor who reads it the same way prices a one-year exposure it does not actually have. Product standards that write a one-year warranty into the product section, rather than a correction period, compound the problem by appearing to shorten the general warranty to a year for that product. (5.1.2)
5.1.3 The Contractor shall warrant that the materials and equipment furnished under the Contract are new unless the Contract Documents permit otherwise, that the Work is free from defects not inherent in the quality required or permitted, and that the Work conforms to the Contract Documents.
5.1.4 The correction period shall not limit the duration of the general warranty or the time within which the Owner can enforce any other obligation under the Contract Documents.
5.1.5 Work not conforming to the Contract Documents, including substitutions not accepted in writing, is defective Work under the general warranty regardless of whether the nonconformance was discovered during the correction period.
5.1.6 A defect discovered after the punch list has been closed under Closeout ProceduresCloseout ProceduresResolves to the current adopted revision.sync/closeout-procedures is a claim under this standard, not a punch list item.

5.2 Correction Period Length

5.2.1 The Contractor shall correct, at no cost to the Owner, Work found not to conform to the Contract Documents within the correction period indicated in the datasheet.
Correction Periodrange
Not less than
years
1235
NOTE One year is the period the standard general conditions carry, and it is the one that reaches a project without discussion. A longer correction period extends the Owner's call-back right past the first seasonal cycle, which is where defects in roofing, paving, drainage, and envelope work tend to surface, and it is priced into the bid as an exposure the Contractor cannot fully control. A product standard that needs a longer call-back on its product carries it there, as a special warranty, rather than lengthening the correction period for the whole Work. (5.2.2)
5.2.3 Where a product standard states a special warranty term longer than the correction period, that term shall apply to that product in addition to, and not in place of, the correction period.
5.2.4 Where the Agreement or the General Conditions state a correction period different from the one indicated in the datasheet, the Agreement and the General Conditions shall govern.

5.3 Commencement of the Correction Period and Warranties

5.3.1 The correction period and every warranty required by the Contract Documents shall commence on the milestone indicated in the datasheet.
Correction Period and Warranty Start Milestoneradio
● Date of substantial completion of the Work
○ Date of substantial completion of the designated portion containing the Work
○ Date the Owner takes beneficial use of the system or area
○ Date of final completion
NOTE Substantial completion is the milestone the standard general conditions tie the correction period to, and it is fixed on a certificate under Closeout ProceduresCloseout ProceduresResolves to the current adopted revision.sync/closeout-procedures, which is what makes it the date every warranty can be tied to without argument. Starting at substantial completion of a designated portion suits a phased project where portions are turned over months apart, at the cost of a different expiration date for each portion. Starting at beneficial use suits a system the Owner begins operating well before the building is complete, and it is the start the manufacturer of that system usually asks for, at the cost of the warranty on that system running out before the rest. Starting at final completion gives the Owner the longest coverage, and it moves the start to a date that depends on how quickly the punch list is closed. (5.3.2)
5.3.3 The date of substantial completion for the purpose of this standard shall be the date stated on the certificate of substantial completion issued under Closeout ProceduresCloseout ProceduresResolves to the current adopted revision.sync/closeout-procedures.
5.3.4 The Contractor shall record on each warranty document the commencement date and the expiration date of the warranty it covers.
NOTE A warranty document that states no commencement date is open to the claim that it commenced at installation, at shipment, or at some other date earlier than substantial completion, which on a long project consumes a year or more of the term before the Owner takes possession. The dates on the document, rather than in a transmittal letter, are what settle it. (5.3.5)

5.4 Phased Completion and Early Use

5.4.1 Where the Contract Documents establish substantial completion separately for designated portions of the Work, the correction period and the warranties for each portion shall commence on the date established for that portion.
5.4.2 The Contractor shall maintain a record of the commencement date established for each portion and shall state the applicable date on each warranty document covering Work in that portion.
5.4.3 Warranties on a system or area the Owner places in beneficial use before substantial completion of the Work shall commence on the date indicated in the datasheet.
Warranty Start for Systems in Beneficial Use Before Substantial Completionradio
● Date of substantial completion of the Work
○ Date the Owner takes beneficial use of the system or area
NOTE Occupancy of a wing, or operation of a chiller to keep a data room cold, before the certificate is issued is common, and the manufacturer whose equipment is running will count its warranty from the day it started. Holding the start at substantial completion keeps every warranty on one date and gives the Owner the full term from the day it takes the whole building, at the cost of the Contractor securing the manufacturer's agreement to that start or carrying the interval itself. Starting at beneficial use matches the manufacturer's own term and leaves the Owner tracking a separate expiration for every system started early. (5.4.4)
5.4.5 Where a manufacturer's warranty runs from startup, shipment, or installation rather than from the indicated milestone, the Contractor shall obtain the manufacturer's written agreement to the indicated start date before the product is started or installed, or shall warrant the product on the manufacturer's terms for the interval between the two dates.
5.4.6 Use of a system or area by the Owner before substantial completion shall not constitute acceptance of Work that does not conform to the Contract Documents.

6 Special and Extended Warranties

6.1 Product Standards Govern Warranty Terms

NOTE A manufacturer sells the same product under several warranties: a material warranty that replaces the product and leaves the labor to the Owner, a labor and material warranty up to a stated dollar limit, and a no-dollar-limit or system warranty that carries the full repair cost and is conditioned on authorized installation, specified detailing, and sometimes a manufacturer's inspection before it is issued. Which of those a project needs depends on the product, which is why the type, the term, and the coverage scope live in the product standard and not here. (6.1.1)
6.1.2 The type, term, and coverage scope of each special warranty shall be as stated in the governing product standard.
6.1.3 Where a product standard requires a special warranty and does not state its form, signatories, commencement, or claim procedure, this standard shall govern those matters.
6.1.4 The Contractor shall confirm with the warranting party, before the action submittal for the product is made, every condition the warranting party places on issuing the warranty the product standard requires, and shall report in writing with that submittal any project condition that would prevent its issuance.
6.1.5 The Contractor shall not furnish a warranty of a lesser type, a shorter term, or a narrower coverage scope than the product standard requires without the Owner's written acceptance.

6.2 Warranty Document Form and Content

6.2.1 Each special warranty shall be written on the form indicated in the datasheet.
Special Warranty Document Formradio
○ The Owner's warranty form bound in the Contract Documents
○ The warranting party's own written warranty form
○ The warranting party's own written warranty form with a cover certificate on the Owner's form
NOTE The three forms differ in whose terms govern. The Owner's form carries the Owner's terms on every warranty and is refused by some manufacturers, who issue warranties only on their own paper. The warranting party's own form is what the manufacturer issues without negotiation, and it carries that party's exclusions, claim procedure, and dispute terms, which differ from one manufacturer to the next. A cover certificate on the Owner's form, attached to the warranting party's own document, records the project, the parties, the dates, and the term the product standard requires in one consistent format while leaving the manufacturer's document intact, at the cost of two documents that have to be read together when a claim is made. (6.2.2)
6.2.3 Each special warranty shall name the Owner as the warranted party and shall identify the project by its name, its address, and the Contract number or the Owner's project number.
6.2.4 Each special warranty shall state the product or assembly covered, the term, the commencement and expiration dates, the party responsible for warranty service and its address and telephone number, the procedure for making a claim, and the exclusions and conditions on coverage.
6.2.5 Each special warranty shall bear the original signature of the warranting party's authorized representative and shall be dated.
6.2.6 A special warranty whose stated exclusions or conditions narrow the coverage the product standard requires shall not be accepted unless the product standard admits that exclusion or condition.

6.3 Signatories and Countersignature

6.3.1 The Contractor's countersignature on special warranties issued by others shall be as indicated in the datasheet.
Contractor Countersignature of Special Warrantiesradio
○ Required on every special warranty
● Required on special warranties issued by a subcontractor or installer
○ Not required
NOTE A countersignature gives the Owner one party to pursue. A subcontractor who issues a warranty and then leaves the business leaves the Owner with a document and no one behind it, and the Contractor's signature on the same document puts the Contractor behind it; manufacturers, by contrast, are usually still in business when the claim comes and issue their warranties directly to the Owner, so countersigning those adds a signature without adding a responsible party. Requiring the countersignature on every warranty is simplest to administer and is the arrangement under which the Contractor is answerable for every warranty claim on the project, which the Contractor prices. Not requiring it leaves the Owner to pursue each warranting party separately. (6.3.2)
6.3.3 Where the Contractor countersigns a special warranty, the Contractor shall be jointly responsible with the warranting party for performance of that warranty.
6.3.4 A subcontractor's or installer's default, insolvency, or cessation of business shall not relieve the Contractor of a warranty obligation the Contractor countersigned.
6.3.5 Where a product standard requires a system warranty signed by both the manufacturer and the installer, both signatures shall appear on a single warranty document.

6.4 Transferability

6.4.1 The transferability of each special warranty to a successor owner shall be as indicated in the datasheet.
Special Warranty Transferabilityradio
○ Assignable to a successor owner without the warranting party's consent
○ Assignable to a successor owner on written notice to the warranting party
○ Transferability not required
6.4.3 Where a warranty is required to be assignable, the warranty document shall state the assignability on its face.

6.5 Installer Certification and Warranty Issuance

6.5.1 Where a product standard conditions a special warranty on installation by an installer certified, licensed, or approved by the manufacturer, the Contractor shall furnish the manufacturer's written confirmation of the installer's standing before that Work begins.
6.5.2 The Contractor shall cause each special warranty to be issued by the warranting party at the completion of the warranted Work, and shall not defer issuance to closeout.
NOTE A manufacturer's system warranty is issued on the manufacturer's inspection of the finished installation, and the inspection has to happen while the work is still accessible. A warranty requested at closeout for a roof that has been covered by equipment, or a waterproofing membrane that has been backfilled, is issued late, with conditions, or not at all. (6.5.3)
6.5.4 Where the warranting party requires an inspection of the completed Work before issuing the warranty, the Contractor shall schedule that inspection and shall correct, at no cost to the Owner, every condition the warranting party identifies as preventing issuance.

6.6 Exclusions and Maintenance Conditions

6.6.1 An exclusion in a special warranty for damage caused by others, misuse, casualty, lack of maintenance, or normal wear shall not relieve the Contractor of its general warranty for a defect in the Contractor's own Work.
NOTE A manufacturer's exclusions describe what the manufacturer will not pay for, and they are drafted around the manufacturer's product. Read as a limit on the Contractor's obligation, they open a gap in which a leak caused by a flashing the Contractor installed wrong is excluded by the membrane manufacturer and then disclaimed by the Contractor as a product matter. The general warranty closes that gap: the manufacturer's exclusions govern the manufacturer's warranty and nothing else. (6.6.2)
6.6.3 The Contractor shall deliver to the Owner, with each special warranty, a written statement of the maintenance the warranting party requires to keep the warranty in force and of the conditions, including unauthorized work on the warranted assembly, that void coverage.
NOTE Many special warranties are conditioned on documented maintenance and on the warranting party's authorization before anyone else works on the assembly, and they are voided quietly when the Owner's staff does not know the conditions exist. The conditions reach the Owner as an operating instruction when they are delivered with the warranty rather than left inside it. (6.6.4)

7 Warranty Claims and Correction

7.1 Notice of a Defect

7.1.1 The Owner shall give the Contractor written notice of a defect discovered during the correction period or during the term of any warranty, stating the location and the condition observed.
7.1.2 Notice to the Contractor shall constitute notice to every subcontractor, installer, and manufacturer whose warranty covers the defect, and the Contractor shall forward the notice to each of them.
7.1.3 During the correction period, the Contractor shall receive and coordinate every warranty claim on the Work, including claims under a manufacturer's warranty issued directly to the Owner, and shall be the Owner's single point of contact for the claim.
NOTE A manufacturer's warranty issued directly to the Owner is the Owner's to enforce, and after the correction period the Owner enforces it alone. During the correction period the Contractor is still on the project, still answerable for the installation, and in a position to tell whether a failure is the product or the installation, which is the question every warranty claim on an installed product turns on. (7.1.4)
7.1.5 Where the Contractor and the Owner disagree whether a condition is a defect covered by the correction period or by a warranty, the Engineer of Record shall make the initial determination, subject to the dispute resolution provisions of the Contract Documents.

7.2 Response Times

7.2.1 A defect is an emergency for the purpose of this standard where it endangers life, health, or security, admits water into the building, interrupts heating, cooling, power, water, or sanitary service to an occupied area, or threatens progressive damage to the Work or to the Owner's property if it is not addressed before the next business day, and where the parties disagree whether a defect is an emergency the Engineer of Record shall make the initial determination.
7.2.2 The Contractor shall respond on site to an emergency defect within the time indicated in the datasheet after receiving notice.
Emergency Defect Response Timerange
Not more than
hours
24812244872
7.2.3 The Contractor shall commence correction of a defect that is not an emergency within the time indicated in the datasheet after receiving notice, and shall pursue the correction to completion without interruption.
Commencement of Correction for Other Defectsrange
Not more than
days
135710142130
NOTE An emergency response time is a mobilization time, not a repair time: the Contractor is on site, has stopped the water or restored the service by temporary means, and has assessed the permanent correction. Twenty-four hours is what a contractor with a local office meets with a telephone call; a shorter time is met only by a contractor that holds a service crew, which is priced accordingly, and it matters most on a building that cannot be left, such as a hospital, a data center, or a cold storage facility. The time to commence a non-emergency correction is set against the Owner's tolerance for living with the defect, and a long time is accepted on a defect that is cosmetic and resented on one that is not. (7.2.4)
7.2.5 Where the response and correction times in a product standard differ from those indicated in the datasheet, the shorter time shall govern for that product.

7.3 Correction, Collateral Damage, and Cost

7.3.1 The Contractor shall correct a defect covered by the correction period or by a countersigned warranty by repair or replacement, at no cost to the Owner, including the cost of labor, material, equipment, access, and the manufacturer's representative's attendance where the correction requires it.
7.3.2 The Contractor shall repair or replace, at no cost to the Owner, other Work and the Owner's property damaged by the defect or by the correction of it, and shall restore disturbed finishes to the condition they were in before the defect.
NOTE Who pays to open a ceiling, remove a casework run, or cut a slab to reach a defect is the cost fight a warranty clause silent on collateral work invites. A defect that costs a hundred dollars to fix and ten thousand to reach is a ten thousand dollar defect, and the party that caused it bears it. (7.3.3)
7.3.4 The Contractor shall perform corrective work at times the Owner designates so that the Owner's operations in the affected area are not interrupted, except where an emergency requires immediate work.
7.3.5 The Contractor shall remove from the site, at no cost to the Owner, Work that has been rejected and not corrected.
7.3.6 Where a defect in a product is the product itself and not its installation, the Contractor's obligation under the correction period shall include the removal, replacement, and reinstallation that the manufacturer's warranty does not cover.

7.4 Re-Warranty of Corrected Work

7.4.1 Work corrected or replaced under the correction period or under a warranty shall carry a fresh correction period, or a fresh warranty term, of the same length as the original, measured from the date the correction is completed and accepted, or the remainder of the original period, whichever ends later.
NOTE Without a fresh period, a correction made in the last month of the term carries a month of coverage, and a correction that fails a week after the term ends is the Owner's problem. The longer-of-the-two rule removes any incentive to defer a correction toward the end of the term, and it is what the standard general conditions provide for the correction period. (7.4.2)
7.4.3 Where a product standard states a different re-warranty rule for its product, the product standard shall govern for that product.

7.5 Failure to Respond and the Owner's Remedies

7.5.1 Where the Contractor does not respond to an emergency defect within the indicated time, the Owner may have the emergency addressed by others without further notice, and the cost shall be borne by the Contractor.
7.5.2 Where the Contractor does not commence correction of a defect within the indicated time, or does not pursue it to completion, the Owner may give the Contractor a second written notice stating a further period of not less than seven days, after which the Owner may have the defect corrected by others.
7.5.3 The cost of correction by others under this standard, including the Engineer of Record's services made necessary by the Contractor's failure, shall be borne by the Contractor, and the Owner may recover it by deducting it from sums due the Contractor, by claim against the Contractor, or by claim against the surety under the performance bond or the maintenance bond.
7.5.4 Correction by others under this standard shall not release the Contractor from the correction period or any warranty for the balance of the Work, and shall not release the surety.
7.5.5 The Owner's remedies under this standard are in addition to, and not in place of, the remedies the Agreement, the General Conditions, and the law provide.

8 Surety Bonds

8.1 Bond Types Required

8.1.1 The Contractor shall furnish the bonds indicated in the datasheet.
Bonds Requiredcheckbox
☐ Bid bond
☐ Performance bond
☐ Payment bond
☐ Maintenance bond
NOTE Which bonds a project carries is decided by statute on public work and by the Owner on private work. A public works bonding statute requires a performance bond and a payment bond above its threshold, and the payment bond takes the place of the mechanic's lien that is unavailable against public property. A private Owner weighs the premium, which runs from a fraction of a percent to a few percent of the Contract Sum depending on the Contractor's credit and the size of the job, against the exposure of a Contractor default, and a lender financing the project often decides the question by requiring the bonds as a condition of the loan. A maintenance bond backs the correction period with surety credit, and it is required most often on public infrastructure where the Owner will not be able to pursue a defaulted Contractor through the courts in time to matter. A bid bond is furnished with the bid and belongs to the procurement, and it appears here so that the Contractor's bonding capacity is confirmed for the whole program at one time. (8.1.2)
8.1.3 Where a bid bond is required, its amount, its form, and the time for furnishing it shall be as stated in the Instructions to Bidders.
8.1.4 The bonds shall be furnished at the Contractor's cost, and the premium shall be included in the Contract Sum.

8.2 Bonding Statute

8.2.1 The bonds shall comply with the bonding statute indicated in the datasheet.
Bonding Statute Governing the Workradio
○ Federal Miller Act
○ State public works bonding statute
○ None, private work not subject to a bonding statute
NOTE The Miller Act applies to federal construction contracts above the threshold the Federal Acquisition Regulation sets, and the regulation fixes the penal sum of each bond at the full original contract price and prescribes the standard forms the bonds are written on. A state statute applies to state, county, municipal, school district, and other public work in that state, and it fixes its own threshold, penal sums, claimant class, and notice and suit periods, which the Contractor is responsible for knowing. On private work no statute applies, and every bond term is set by the Agreement and this standard. Work funded by a federal or state grant is public work under the statute of the body that lets the contract, and a grant condition sometimes adds the federal requirements on top of it. (8.2.2)
8.2.3 On work subject to a bonding statute, the penal sum, the form, the claimant class, and the notice and suit periods of each bond shall be not less than the statute requires, regardless of the values indicated in the datasheet.
8.2.4 On work subject to a bonding statute, the bonds shall be filed with the public body and recorded where the statute requires.

8.3 Bond Form

8.3.1 Each performance bond and payment bond shall be written on the form indicated in the datasheet.
Performance and Payment Bond Formradio
○ The bond form bound in the Contract Documents
○ AIA A312
○ EJCDC C-610 and C-615
○ ConsensusDocs 260 and 261
○ The statutory form prescribed by the bonding statute
NOTE The form sets what the surety has to do when the Contractor defaults and how long the Owner waits for it. The industry forms differ in the notice the Owner gives before the surety's obligation is triggered, in the options the surety has once it is, in the time the surety has to choose, and in the suit limitation, and each is drafted to pair with its publisher's general conditions, so the form that matches the General Conditions on the project is the one whose definitions and procedures line up. A form bound in the Contract Documents carries whatever the Owner's counsel put in it, and it is the form a public Owner or an institutional Owner with a standing program usually requires. A statutory form, such as the federal standard forms, is mandatory where the statute prescribes it and is not modified. (8.3.2)
8.3.3 A bond on a form other than the one indicated shall not be accepted unless the Owner accepts the substitute form in writing before the bond is executed.
8.3.4 Each bond shall incorporate the Contract by reference, shall identify the Owner as obligee, and shall state the penal sum in dollars.

8.4 Penal Sums

8.4.1 The penal sum of the performance bond shall be the percentage of the Contract Sum indicated in the datasheet.
Performance Bond Penal Sumrange
Not less than
% of the Contract Sum
10255075100
8.4.2 The penal sum of the payment bond shall be the percentage of the Contract Sum indicated in the datasheet.
Payment Bond Penal Sumrange
Not less than
% of the Contract Sum
10255075100
8.4.4 Where the Agreement states a penal sum different from the one indicated in the datasheet, the Agreement shall govern.

8.5 Adjustment for Changes in the Contract Sum

8.5.1 The penal sum of each bond shall cover the Contract Sum as adjusted by change order.
8.5.2 Where the Contract Sum has increased by change order, in aggregate, by more than the percentage indicated in the datasheet, the Contractor shall furnish a rider or an endorsement from the surety increasing the penal sum to the adjusted Contract Sum within thirty days after the change order that crosses the threshold.
Aggregate Contract Sum Increase Requiring a Bond Riderrange
% of the original Contract Sum
510152025
8.5.4 The cost of a rider, endorsement, or additional premium required by a change in the Contract Sum shall be included in the change order that requires it.

8.6 Surety Qualification

8.6.1 Each surety shall hold a certificate of authority to transact surety business in the state in which the project is located.
8.6.2 The surety's listing on Treasury Department Circular 570 shall be as indicated in the datasheet.
Surety Treasury Circular 570 Listingradio
● Required
○ Not required
NOTE Treasury listing is mandatory on federal bonds and is the qualification nearly every public and private Owner requires in addition to state licensing, because it is the one list that states, for each surety, the largest single bond the Treasury has accepted from it. A surety that is state licensed and not Treasury listed is a smaller company or a company that has not sought federal work, and a project that later receives federal grant funding discovers at that point that its surety is unacceptable and has to re-bond. (8.6.3)
8.6.4 Where Treasury listing is required, the surety's underwriting limitation stated in Circular 570 shall be not less than the penal sum of each bond it issues, or the excess shall be reinsured by a company listed in Circular 570 as an acceptable reinsuring company, with the reinsurance agreement furnished with the bond.
8.6.5 The surety's minimum financial strength rating assigned by A.M. Best shall be as indicated in the datasheet.
Surety Minimum A.M. Best Financial Strength Ratingselect
No rating minimum
B+
A-
A
A+
8.6.6 The surety's minimum financial size category assigned by A.M. Best shall be as indicated in the datasheet.
Surety Minimum A.M. Best Financial Size Categoryselect
No size minimum
Class V
Class VII
Class VIII
Class X
Class XV
NOTE The rating and the size category answer two different questions. The financial strength rating is the rating agency's opinion of the surety's ability to meet its obligations, and a minimum in the A range excludes companies the agency considers vulnerable; a minimum of A- is the floor most Owners who state one use, and raising it to A or A+ narrows the field to the larger national carriers and raises the premium accordingly. The size category is a measure of the surety's policyholders' surplus, and a minimum is set so that the penal sum on this project is small relative to the company's capital; Class VII corresponds to a surplus in the tens of millions of dollars and is the common floor on a mid-size project, while a minimum of Class X or above is set on a very large contract or by an institutional Owner's standing program. No minimum of either kind leaves the qualification to Treasury listing and state licensing alone, which is what a small private project usually does. (8.6.7)
8.6.8 Where a surety's rating or size category falls below the indicated minimum during the term of a bond, or where the surety's certificate of authority is revoked or its Treasury listing withdrawn, the Contractor shall furnish a replacement bond from a qualified surety within thirty days after the Owner's written notice, at no cost to the Owner.

8.7 Bond Execution and Duration

8.7.1 Each bond shall be executed by the Contractor and by the surety's attorney-in-fact, shall bear the surety's seal, and shall be accompanied by a power of attorney covering the bond and dated not earlier than the bond.
8.7.2 Each bond shall be dated not later than the date of the Agreement.
8.7.3 The performance bond shall remain in force through the correction period and through the term of every countersigned special warranty, and shall cover the Contractor's correction and warranty obligations under this standard.
8.7.4 The payment bond shall remain in force until every claimant entitled to claim under it has been paid or the period for bringing a claim under the bond or the bonding statute has expired.
NOTE A performance bond that expires at final payment leaves the Owner without surety credit for the correction period, which is the period in which the Contractor who has been paid in full has the least reason to return. The industry forms carry the surety through the correction period, and a form that does not is the form to read before accepting it. (8.7.5)

8.8 Maintenance Bond

8.8.1 Requirements in this article apply where a maintenance bond is indicated in the datasheet.
8.8.2 The maintenance bond shall guarantee the correction of defects in materials and workmanship in the completed Work for the term indicated in the datasheet, measured from the commencement date established for the correction period.
Maintenance Bond Termrange
Not less than
years
1235
8.8.3 The penal sum of the maintenance bond shall be the percentage of the final Contract Sum indicated in the datasheet.
Maintenance Bond Penal Sumrange
Not less than
% of the final Contract Sum
51015202550100
NOTE A maintenance bond with a one-year term parallels the correction period and is the arrangement under which the surety stands behind exactly the obligation the Contractor already has. A two-year or longer term is required on paving, drainage, landscaping, and roofing by public Owners whose experience is that the defects in that work surface after a full seasonal cycle, and it is priced as a longer exposure. The penal sum is set against the cost of the corrections the Owner expects to be fighting over, not the whole Work, which is why it is usually a fraction of the Contract Sum, and a public body sets it by its own ordinance or standing practice. (8.8.4)
8.8.5 Where the performance bond remains in force through the correction period and covers the correction obligation, the Owner may accept the performance bond in place of a separate maintenance bond for a term equal to the correction period.
8.8.6 The maintenance bond shall be furnished with the closeout warranty submittals and shall be a condition of final payment.

8.9 Subcontractor Bonds

8.9.1 Performance and payment bonds from subcontractors shall be as indicated in the datasheet.
Subcontractor Performance and Payment Bondsradio
○ Not required
○ Required for the subcontracts the Contractor designates, at the Contractor's cost
○ Required for subcontracts exceeding the value stated in the Agreement
NOTE A subcontractor bond protects the Contractor, and through the Contractor the Owner, against a subcontractor default that the Contractor's own bond would otherwise have to absorb. Leaving the decision to the Contractor is the norm on private work, because the Contractor carries the subcontractor risk and prices it. Requiring bonds above a stated subcontract value is used by public Owners and by Owners on very large projects to keep the Contractor's bonding capacity from being consumed by one subcontractor's failure, and the premium on every bonded subcontract is passed through in the bid. Not requiring them leaves the Contractor's bond as the only surety credit on the project. (8.9.2)
8.9.3 Where a subcontractor bond is required, it shall name the Contractor as obligee, shall be written on a form consistent with the Contractor's own bonds, and shall be issued by a surety meeting the qualification requirements of this standard.
8.9.4 The Contractor shall furnish a copy of each subcontractor bond to the Owner within fourteen days after the Owner's written request.

8.11 Claims Against a Bond

8.11.1 The Owner shall give the surety written notice, in the manner the bond form requires, of a Contractor default the Owner intends to claim on the performance bond, and a copy of that notice to the Contractor.
8.11.2 The surety shall respond to the Owner's notice within the time the bond form sets, and where the bond form sets no time, within fourteen days.
8.11.3 The Owner's cost of correcting or completing Work by others after a Contractor default, including the Engineer of Record's services made necessary by the default, shall be recoverable from the surety up to the penal sum.
8.11.4 A claimant under the payment bond shall give the notices and bring any action within the periods the bond form and the bonding statute require, and the Contractor shall furnish a copy of the payment bond to any claimant who requests it.
NOTE The payment bond is the subcontractor's and supplier's remedy, and the notice and suit periods on it are short and strictly applied. A supplier who has not been paid and does not know the bond exists loses the claim by missing a deadline it never saw, which is why the Contractor has to produce the bond on request. (8.11.5)

9 Warranty Book at Closeout

9.1 Assembly and Content

9.1.1 The Contractor shall assemble every warranty on the project into a warranty book, organized by the product standard under which each warranty is required, and shall deliver it as a volume of the operation and maintenance package under Operation And Maintenance DataOperation and Maintenance DataResolves to the current adopted revision.sync/operation-and-maintenance-data.
9.1.2 The warranty book shall be delivered within the closeout sequence and by the time Closeout ProceduresCloseout ProceduresResolves to the current adopted revision.sync/closeout-procedures establishes for the operation and maintenance package.
9.1.3 The warranty book shall contain a warranty log listing, for every warranty on the project, the product or assembly, the product standard requiring it, the warranting party and its service contact, the type of warranty, the term, the commencement date, the expiration date, and the maintenance and conditions on which coverage depends.
9.1.4 The warranty log shall additionally list the Contractor's general warranty with the commencement and expiration dates of the correction period, and each bond with its surety, its penal sum, and the date through which it remains in force.
NOTE The warranting party, the dates, and the conditions are the three things an Owner needs on the day a defect appears, and the log puts them on one page. Without it, the facilities staff reads thirty documents to learn whether the roof is still covered and who to call, and the call is made late or to the wrong party. (9.1.5)
9.1.6 The Contractor shall deliver the warranty book in the format, the number of copies, and the medium that Operation And Maintenance DataOperation and Maintenance DataResolves to the current adopted revision.sync/operation-and-maintenance-data requires for the operation and maintenance package.

9.2 Acceptance and Rejection

9.2.1 A warranty document that is unsigned, undated, photocopied in place of an original, that omits the commencement or expiration date, that names a party other than the Owner as the warranted party, or that states a type, term, or coverage scope less than the product standard requires shall be rejected and returned for correction.
9.2.2 The Contractor shall correct and resubmit a rejected warranty document within fourteen days after its return.
9.2.3 Acceptance of the warranty book shall be a condition of final payment under Closeout ProceduresCloseout ProceduresResolves to the current adopted revision.sync/closeout-procedures.
NOTE A photocopied or undated warranty is the recurring closeout failure, and it is also the one that costs the Owner the most, because a claim under it begins with an argument about whether the document is enforceable at all. Rejecting it at closeout, while the Contractor still has retainage at stake, is the only point at which the correction is free. (9.2.4)

10 Coordination with Product Standards

10.1 The Contractor shall reconcile the warranty and bond requirements of each product standard with this standard and shall report in writing, before the action submittal for the product, any conflict between them.
10.2 Where a product standard and this standard address the same subject, the more stringent requirement shall govern unless the Contract Documents direct otherwise.
10.3 The Contractor shall include in each subcontract and purchase order the warranty, countersignature, transferability, response time, and bond requirements of this standard that apply to the subcontractor's or supplier's scope.
NOTE A subcontractor that never saw this standard, because its subcontract incorporated only the technical section for its trade, learns of the countersignature and the response time when the claim arrives. Flowing the requirements into the subcontract is what makes them the subcontractor's obligation and not only the Contractor's. (10.4)

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"Warranties and Bonds," SynC Standards, revision 4. Licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). Source: https://synergyinconstruction.com/standards/general/warranties-and-bonds. Reference material only; not professional engineering advice and provided without warranty. Verify against governing codes and have a licensed professional review before use.