What are Surety Bonds?

Before defining the term “surety bond,” one must understand the meaning of surety. Surety, or guarantor, is when an individual or an organization assumes the responsibility of repaying a debt in case the debtor fails to close it or makes defaults in his/her payments.

A surety bond, thus, is a legal contract binding the debtor (or the principal), the obligee, and the surety. This bond entitles the obligee, which is the government, to file a claim against the surety, if the principal fails to keep up with the contract or law, to recover any harm incurred in recovering the debts itself. Continue reading →