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Bond Definitions


Bid Bonds - A bid bond is generally required by an owner/obligee at the time of the bid opening from the contractor bidding their project. The bid bond is a guarantee that should the contractor be awarded the project, they will execute the contract and provide the performance and/or payment bond to the owner.

Bid bonds are used as a prequalification tool by the owner and are generally required for a % of the estimated bid amount. This % generally ranges from 5% to 20% of the estimated amount of the bid.

If the contractor is successful in their bid and for whatever reason fails to execute the contract or provide the required performance and/or payment bonds, the owner can make claim against the bid bond for its full amount

Performance Bond - A performance bond is generally required of the successful bidder of a particular job. The performance bond guarantees that the contractor will complete their project pursuant to the terms of the contract/agreement. The amount of this type of bond is usually equal to the full contract amount.

Payment Bond - A payment bond is also usually required of the successful bidder of a particular job an guarantees that all laborers and materialman will be paid for their work on the job. This bond protects the various suppliers and subcontractors working for the contractor.


Subdivision bonds are bonds that are required of developers and/or property owners who are doing improvements to their property. Some of the most common type of subdivision bonds are the following:

Performance Bond - Guarantees performance of the underlying agreement. This generally involves the construction of infrastructure improvements that the developer/property owner is required to improve. These bonds are generally required by municipal entities, such as cities, countries, water districts, etc.

Payment Bond - Guarantees the payment to all laborers and materialmen and this type of bond is also generally required by municipal entities.

Grading Bond - Guarantees that all required grading improvements will be performed as deemed sufficient by the municipal entity requiring the bond.

Property Tax Bond - This bond guarantees payment of future property taxes on the property and is required by the County where the property is located.

Department of Real Estate Bonds - The Department of Real Estate (DRE) has various bond requirements of developers. These quite often involve condominium projects being built and in order for the developer to secure their "white slip" from the DRE they have to provide a bond. The various DRE bonds provide assurance to homeowners associations, that common association has taken over the property from the developer.


There are many different types of miscellaneous or license and permit bonds that are required of different type of businesses. These bonds generally are for the benefit of municipal or state agency and safeguard the public against misrepresentation from the party required to provide the bond. Some of these bonds are as follows:

Contractors License Bond - To be licensed to perform work in a particular State, a contractor must generally provide a bond to that State. This bond protects individuals and businesses with whom the individual securing the bond has contracted with.

Motor Vehicle Dealer Bond - This bond is required by the Department of Motor Vehicles for both new and used car dealers. The amounts of the bond vary depending on the State for which this is applicable and the amount of units the car dealer is selling.

Sales Tax Bond - This type of bond is required by various States to guarantee payment of sales taxes due.

Court Bond - Courts often require various types of bonds from both plaintiffs and defendants. Some of the more common types of bonds are preliminary injunction bonds, temporary restraining order bonds, writ of attachment bonds and appeal bonds.

There are many additional types of surety bonds which are often required of individuals and/or businesses. Our company has access to markets which can issue every type of bond possible in all guarantee against employee theft and dishonesty.

Please contact our office to discuss your particular situation and we will make every effort to find the appropriate surety market to best fit your needs.

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© 2016 Noddle Surety & Insurance Services, Inc. All Rights Reserved.
19507 Ventura Blvd. Tarzana, CA 91356
Phone: (818) 881-1011 ~ Fax: (818) 881-1551

© 2016 Noddle Surety & Insurance Services, Inc. All Rights Reserved.
19507 Ventura Blvd. Tarzana, CA 91356
Phone: (818) 881-1011 ~ Fax: (818) 881-1551