Construction Glossary and Terms

Bond or bonding

An amount of money (usually $5,000–$10,000) which must be on deposit
with a governmental agency in order to secure a contractor’s licence. The bond may be used to pay for the unpaid bills or disputed work of the contractor. Not to be confused with a “performance bond.” Such bonds are rarely used in residential construction, they are an insurance
policy which guarantees proper completion of a project.

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