What Are the Major Types of Construction Bonds in Missouri?
Aug 21 2025 On Behalf of David M. Duree & Associates, P.C. Construction
During a construction project, the client, property owner, developer, or various contractors may require construction companies working on the project to obtain a bond. Construction bonds ensure performance and protect property owners and other parties involved in a project. But what types of bonds do parties typically require in Missouri construction projects?
Understanding Construction Bonds
A construction bond provides a financial guarantee to parties involved in a construction project. Every bond will involve three parties:
- The Obligor – The party required to perform some obligation in a construction project, such as completing work or paying subcontractors
- The Obligee – Typically, the property or project owner protected by the bond
- The Surety – The bond company responsible for paying out the bond when required
In a construction bond, the obligor typically pays a fee for the surety’s services in supplying the bond. Should the surety have to pay out the bond to the obligee, it may pursue reimbursement from the obligor.
Missouri law typically requires construction bonds for public projects to protect government-owned property and public funds spent on a construction project.
Major Types of Construction Bonds in Missouri
The primary types of construction bonds used in projects in Missouri include:
Bid Bonds
A bid bond guarantees that the winning bidder in a construction RFP will sign a contract with the project owner and provide all required performance and payment bonds. Bid bond requirements most frequently appear in public construction projects or large private construction projects, as the bonds help prevent non-serious or unqualified bidders from bidding on a project and dissuade bidders from submitting an unfeasibly low bid to secure the project and later demand a higher price after seeing the other unsealed bids.
Performance Bonds
Performance bonds ensure the completion of a construction project. These bonds protect project owners in case a contractor defaults and fails to finish a project or provides substandard work that requires revision. When a contractor defaults on their obligations under a construction contract, a performance bond can provide funds to hire another contractor to finish or correct the original contractor’s work.
Payment Bonds
Payment bonds ensure that subcontractors, independent laborers, and materials suppliers receive payment from the general contractor on a construction project. In most construction projects, the property owner or developer only deals with the general contractor, who in turn hires the subcontractors needed to complete the project and may purchase required building materials. A payment bond protects the property owner from a scenario where the general contractor fails to pay subcontractors or materials suppliers, since a lack of payment may entitle a subcontractor to file a mechanic’s lien on the property to recover payment. A subcontractor that files a mechanic’s lien against a property can later pursue legal action to foreclose on the property if they do not receive payment from the general contractor or the property owner.
Maintenance (Warranty) Bonds
Property owners may require contractors to provide maintenance or warranty bonds, under which the contractor promises to fix any defects discovered in their work within a specific period of project completion, such as one or two years. A maintenance/warranty bond can require the contractor to fix discovered defects at its expense or provide the property owner with money to hire another contractor to resolve the issues.
Contact a Construction Law Attorney Today
When you hire a contractor for a construction project or submit a bid to work on a project, you may become involved with construction bonds. Contact David M. Duree and Associates, P.C., for an initial consultation with a construction law attorney to learn more about the types of bonds you might require or obtain for a construction project in Missouri.