Contractors Bonds

**RWright** · 03-28-2007, 08:14 AM

Good Morning,

We applied for a Bond The bond came in on Friday. We hadn't picked it up. Over the weekend we found one online for half the price. We had paid in advance for the bond. The Bonding company says it'll be 4-5 weeks to recieve our money back.
we need the bond for licensing . We were going to get the original bond so we can get licensed then cancel it. The bonding company says once we submit the bond it's ours and they wont prorate any monies for early cancelation. We need that money for the new bond.

**aaron** · 03-28-2007, 08:19 AM

What does your written contract say? What state is involved?

**lwpat** · 03-28-2007, 07:46 PM

You can either save money and wait or pay what you originally agreed.

**RWright** · 03-29-2007, 03:44 AM

We don't have a contract. It's oregon. I called the bonding company. The guy said that the money has to be rerouted through the proper channels that they are not some mom and pop outfit "whatever that means" and we'll have to wait for our money back. I was put on hold several times and talked to 5 different people.
Is this common practice? Or can they just wait 2 years before returning our money?
Thank you

**lwpat** · 03-29-2007, 04:34 AM

I don't think you need to be in the contracting business if you do not have enough finances to wait for your bond money to be returned. You are just asking for a lot of trouble. There are a lot of regulations and pitfalls for someone not familar with the business world. My suggestion is to go to work for someone else until you learn the ropes.

jk · 03-29-2007, 03:37 PM

Quoting lwpat

I don't think you need to be in the contracting business if you do not have enough finances to wait for your bond money to be returned. You are just asking for a lot of trouble. There are a lot of regulations and pitfalls for someone not familar with the business world. My suggestion is to go to work for someone else until you learn the ropes.

Waiting for the bond money back? Heck, did you miss the part where OP intends on scamming the state. They want to buy a bond and use it to procure a license and then cancel the bond.

======================
RWright; do you have any idea how a bond works?? You are purchasing an insurance policy. As you have been told by the bonding company, once the bond is issued and accepted (put in force), there is no returning it.

It's not like a pair of shoes you buy and then return if you don;t like them. It is a bond that is payable upon agreed upon circumstances. It matters not if you don;t want or need the bond anymore. It is more like an insurance policy that you pay for it for a particular time frame or for a particular undertaking. Can you get a refund from your car insurance payments back if you didn;t make a claim for a prior time period? Of course you can't. Purchasing a bond works the same way.

If it is required by the state for licensure, then once you use it for that purpose, it's yours for as long as agreed upon in the bond agreement. There is no returns after that. It would be dumb to try to cancel since you aren;t getting any money back regardless.

As far as waiting 4 or 5 weeks, big deal. It can take time to process a refund.

**moburkes** · 04-01-2007, 11:05 AM

Yes, you need to be in a different occupation if the cost of the bond drains your bank account. You are also lucky that the bond company will refund your money. Most that I represent do not.

And, you should not be on a legal website explaining that you'd like to commit fraud. You won't last in your business long. If you can't afford the bond, how will you be able to afford the materials for the job, and the labor, when you are waiting on the payment from the customer?