In June of this year, a demolition contractor hired to remove the Regency House Building in Texarkana, inadvertently brought down an adjacent building. The contractor had been required to offer a bond however, a demolition contract performance bond will not cover an accident of this sort. Demolition, one of the most dangerous contractor activities lived up to its reputation in this case.

Per the Texarkana Gazette, (Downtown demolition turns into money pit, lawsuit with neighbor, Lynn LaRowe, Nov. 14 2020), “Demolition of the Regency House at 110 Broad St. was underway by Graylee Construction and Demolition LLC of Ward, Arkansas, and under contract with the City of Texarkana, Arkansas, when a Graylee employee operating heavy equipment caused a huge piece of wall to buckle and fall.” Due to the negligence of the contractor, the owners of the property damaged by the demolition activity filed suit against the contractor, the City of Texarkana and the surety company that issued a $310,000 performance bond to guarantee the contractor’s work. The estimated cost to remedy the accidental damage was estimated at $1.8 million.

A performance bond is a third-party guarantee that the principal, in this case the demolition contractor will comply with specific provisions of the underlying contract. A surety bond insures only that the principal will “perform” those specific contract requirements. This type of obligation traditionally secures the completion of a construction project or as in this case, the fulfillment of a demolition and clearing job. Often required on public projects (and obligatory under the Heard Act, the Miller Act as well as various state “little Miller” acts), a performance bond provides benefits to all of the parties with interest in the project but WILL NOT act as a replacement of liability insurance. A demolition contract performance bond will not cover an accident like the one suffered by property adjacent to the worksite. We’ll hope that the contractor had the appropriate contractor’s liability coverage in this case.

Interested in learning more about contract surety bonds? We recommend two excellent publications on the topic at Click on the “Learn” page! Call us at (800) 373-2804 or email to discuss a demolition contract performance bond or other surety bone need. Performance bond leader, Surety One, Inc. is an experienced underwriter of contract surety bonds. We provided unmatched support of your bid bond need, based on our knowledge about the industry and our focus on our personal relationship with contractors. We facilitate expeditious review and response to your bid bond request in a polite, clear way.