Surefire Strategies for Using Bonds in Real Estate§
A bond is a type of surety that protects one party from a potential loss or default by another party. One common example is the performance bond, an agreement binding two parties in a financial commitment.
Imagine you’re interested in purchasing a luxurious home with stunning views. Situated in a prime location, the seller has piqued the interest of several buyers. Although you’re eager to own it, you need to sell your current residence first.
The seller, occupied with various offers, agrees to sell the property to you with one condition—a performance bond. This bond serves dual purposes: it shields the seller from risk and formalizes your commitment to the contract. Failure to honor this agreement enables the seller to recover damages for your breach.
Overall, a performance bond provides peace of mind for sellers in real estate, bolstering trust and ensuring contractual obligations are met.
Related Terms: surety bond, contractual obligation, breach of contract.
