Maintenance Bond

Dictionary Says

Definition of 'Maintenance Bond'

A type of surety bond purchased by a contractor that protects the owner of a completed construction project for a specified time period against defects and faults in materials, workmanship and design that could arise later if the project was done incorrectly. A maintenance bond is not technically insurance, but basically functions as an insurance policy on a construction project to make sure a contractor will either correct any defects that arise or that the owner is compensated for those defects. Pricing a maintenance bond is very different from pricing regular coupon paying bonds.
Investopedia Says

Investopedia explains 'Maintenance Bond'

A surety bond is a three-way contract where a third party called the surety guarantees the contractual obligations of one party (the principal) to another party (the obligee) by agreeing to pay a sum to the obligee as compensation if the principal does not fulfill its obligations. The surety assures the obligee that the principal will perform the required tasks. A maintenance bond is structured in such a way.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Surety

    The guarantee of ...
  2. Guarantor

    A person who ...
  3. Insurance

    A contract ...
  4. Credit

    1. A contractual ...
  5. Principal

    1. The amount ...
  6. Agency Bond

    A bond issued by ...
  7. Convertible Arbitrage

    An investing ...
  8. Liquidation

    1. When a ...
  9. Canada Savings Bond - CSB

    A financial ...
  10. Illiquid

    The state of a ...

Articles Of Interest

  1. Do-It-Yourself Projects To Boost Home Value

    These simple projects can add value to your property without taking too much out of your wallet.
  2. How To Stage Your Home For A Quick Sale

    Learn how to make your house appealing to the largest number of buyers and increase your chances at a fast sale.
  3. Will Your Home Remodel Pay Off?

    Some renovations will mean a bigger sale price on your home, while others will just cost you.
  4. 4 Types Of Home Renovation: Which Ones Boost Value?

    You think your updated house looks great, but potential buyers may not feel the same way.
  5. This Is Your Brain On Stocks

    Find out how the human mind can hurt investors' portfolios.
  6. Should You Invest Your Entire Portfolio In Stocks?

    It is true that stocks outperform bonds and cash in the long run, but that statistic doesn't tell the whole story.
  7. 5 Tips For Diversifying Your Portfolio

    A diversified portfolio will protect you in a tough market. Get some solid tips here!
  8. 5 Popular Portfolio Types

    Learning how to build these portfolios will increase your investing confidence and give you financial control.
  9. How To Invest When You're Deep In Debt

    Debt is one of the biggest obstacles that prevents people from investing - but it shouldn't be.
  10. Finding Your Investing Comfort Zone

    Choosing the right investments for you is the best way to feel comfortable with your portfolio.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center