Washington Retainage Bond
Description
Definition and meaning
A Washington Retainage Bond is a legal document that ensures a contractor fulfills their obligations related to a construction contract. This bond serves as a guarantee for the project owner that if the contractor fails to meet their payment obligations to subcontractors and suppliers, the surety (the entity providing the bond) will cover these costs up to the bond amount.
Legal use and context
The Washington Retainage Bond is governed by Chapter 60.28 of the Revised Code of Washington. It allows contractors to secure projects by using the bond in place of retaining funds from progress payments. This legal framework is particularly important in construction projects where retainage funds are typically withheld from contractors to ensure completion and payment of all subcontracts.
Key components of the form
The Washington Retainage Bond includes several critical components:
- Principal: The contractor responsible for the project.
- Surety: The bonding company that provides the guarantee.
- Obligee: The project owner or entity that requires the bond.
- Monetary amount: The maximum amount the surety can be liable for, including any additional percentage for change orders.
- Conditions: The conditions under which the bond can be forfeited or claims can be made.
Who should use this form
This form is primarily intended for contractors engaged in construction projects in Washington. It is essential for those who wish to secure their contracts without retaining a portion of their earnings as security. Subcontractors and suppliers may also benefit indirectly, as it protects their right to payment.
How to complete a form
To complete the Washington Retainage Bond, follow these steps:
- Identify the principal (contractor) and the surety (bonding company).
- Specify the obligee (project owner).
- Enter the project details, including the project number.
- Fill in the bond amount, noting any applicable increases due to contract changes.
- Have authorized representatives sign the document, including their titles and contact information.
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FAQ
Purpose of Retainage Retainage, also referred to as a ?hold back,? helps the owner ensure a contractor sufficiently completes the project, and that the work meets with their approval and terms of the contract. It also provides a financial incentive for the contractor to see the project through to its successful finish.
Retainage is the withholding of a portion of the funds that are due to a contractor or subcontractor until the construction project is finished. It is meant to serve as a financial incentive and an assurance that the contractor will complete the project in a satisfactory manner.
For example, if the complete project cost is $200,000 to be paid in five progress payments and the percentage to be retained is 5%, the calculation would be as follows: 200,000 x 0.05 = 10,000 total retainage amount. 10,000 divided by 5 = 2,000 retainage withheld from each progress payment.
Retainage and Retainage Bonds. RCW 60.28. 011 requires agencies to withhold up to 5% of the value of a public improvement contract, not including sales tax ing to Department of Revenue ETA 3024.2013, as retainage until the project is completed and the contract is accepted.
A retention bond allows the retainer to receive the payment in full instead of a partial 90 to 95 percent of the agreed amount. It also provides additional funds to remedy an issue before the project's completion. Furthermore, it helps prevent construction companies from defaulting.
A Retention Guarantee Bond is a written promises to pay for direct loss or damage suffered by a third party as a result of a breach of contract. Many types of bond or guarantee are available for almost any area of risk, subject to underlying security and the risk being acceptable to the guarantor.
General contractors require a $12,000 surety bond, and specialty contractors need a $6,000 bond that they must post to the Washington State Dept.