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August 14, 2009
Bond for renovation work
The alteration agreement for my condo says that "We" (that's me) "shall procure a bond or agreement in the amount of $2,000,000 from an insurance company acceptable to you, insuring you of full performance by us of our obligations under this Agreement".
I called my insurance agent who got us our Condo policy, but they have never heard of this before.
Anyone have any ideas how I get one?
Thanks!
Comments
That seems insane. I've done work in many condo/coops, from small modest buildings to big fancy ones. I've never heard of an owner having to bond his project. Maybe the 'or agreement' language means you have to get insurance coverage for that amount, but that's crazy too, unless you're ripping the roof of the building or something similarly intrusive. To procure a bond you have to pay (I think) 5% of the face value...so if you can't get around this, you have to drop $100K to meet this requirement. $2M in insurance coverage will cost you a fraction of that, but will still be an additional cost.
Usually deviations from the norm in the alteration agreement are because some genius on the board decides that they can build a better mousetrap, and better protect the building's interests. The problem is that once you go off the beaten path, you create all kinds of problems.
Years ago there was a building that wanted really outrageous umbrella insurance coverage for the contractor for a small kitchen/dining renovation...I think the amount was $10M. Other than very big (i.e. they build new buildings, or very very high end (they build $10M apartments) contractors had that kind of coverage, and the building wasn't willing to get their requirements in line w/ every other building in the city, so the project was canceled.
Just out of curiosity, is this a super high end building? Is it a recently constructed one?
Good Luck.
Posted by: jcarch at August 14, 2009 4:07 PM
My boyfriend was a contractor & he had to get those bonds for a couple of jobs. I think you can get around it if you get the client as named insured on insurance but I'm not certain.
Posted by: Arkady at August 14, 2009 4:33 PM
It's a condo in Greenwich Village, and we have a doorman, but I wouldn't say it was super high-end.
Posted by: Frudo at August 14, 2009 6:24 PM
This is called a 'construction surety bond'. You can google it, here's one reference:
http://www.attny.com/gci32djd.html
It has nothing to do with traditional insurance. What it does is that if the contractor walks off the job due to a dispute with the owner, the bonding company will step in and finish it using their own contractors, in accordance with the drawings and specs of the contract.
I've asked for one on a big job (yes, that did involve ripping off the roof) but I've never seen it asked for as part of an alteration agreement. The chances of the condo as a whole being negatively affected by work being stopped due to a dispute in an owners apt seems to me to be very small.
But of course you're in Manhattan where the lawyers are completely out of control.
Posted by: denton at August 15, 2009 6:44 AM
i think the phrasing is confusing. It might mean in simple english that the contractor has to be licensed and insured for a certain amount.
Call Utica first insurance company for a clarification of the definition of the phrase. They insure many contractors in the ny area. They will tell you with no obligation to purchasing a policy. Maybe this will solve the mystery.
Posted by: Ysabelle at August 15, 2009 9:56 AM
The less the public understands the more things cost. The more profitable it is for someone else. It is ridiculous!
Posted by: Ysabelle at August 15, 2009 9:58 AM
Ysabelle sweetie, the phrasing is very clear. They're looking for a performance bond.
Posted by: denton at August 15, 2009 12:01 PM
have your contractor purchase additional insurance policy for that amount. if i rem right, is about a few grand depends of scope of work.
denton: is called a performance bond
Posted by: bblamchops at August 15, 2009 2:50 PM
bblamchops, pls see my posting at 12:01. Then click the link I supplied at 6:44. Yes, they're asking for a performance bond. It's a subset of and the popular name for a construction surety bond. End of story.
Posted by: denton at August 15, 2009 6:44 PM
Thanks Denton. Now we all learned something new and valuable.(performance bond)
Why don't they say performance bond?
Posted by: Ysabelle at August 15, 2009 9:39 PM
Thanks Denton. Now we all learned something new and valuable.(performance bond)
Why don't they say performance bond?
Posted by: Ysabelle at August 15, 2009 11:34 PM
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