Maintenance Bond

You run a construction company. You were hired by a rich guy to build a mausoleum for his dearly departed pet iguana (it includes a 40-foot statue of Mr. Iggy). The client is demanding, liable to complain about the smallest imperfections. To make him feel better, you purchase a maintenance bond to cover yourself.

A maintenance bond represents a kind of surety bond. In case there's an issue with a building project (Mr. Iggy's tail falls off, the stone turns black in the rain, etc.), the bond will pay for any fixes that become necessary.

Generally, a contractor will purchase a surety bond on behalf of the owner of the completed project. The contractor will put up some portion of the total...like bailing someone out of jail...and a bit like buying insurance.

In most cases, the contractor pays about 1% to 4% of the total in order to purchase the bond. In Mr. Iggy's case, the grieving pet owner demands a $50,000 maintenance bond. That means you'll have to put up somewhere between $500 to $2,000 to buy the bond.