What construction firms should know about Louisiana surety law

On Behalf of Dunlap Fiore, LLC |

Large construction projects and other financial endeavors require a surety bond in Louisiana. This type of insurance policy guarantees that a construction firm will meet the terms of a contract. Failure to do so can result in a financial payout for the project owner, subcontractor, creditor or anyone else affected by the firm’s liability.

If you are developing a new residential, commercial or industrial construction project, review the Louisiana laws regarding surety bonds.

Surety bond requirements

Louisiana law mandates a surety bond of at least $50,000 for any firm offering a business opportunity such as new development. In addition, an independent contractor or broker of the firm offering the business opportunity must have a $25,000 minimum surety bond. If either the contractor or the subcontractor commits breach of contract, unfair or deceptive practices, or other dishonest actions, this bond will cover the resulting financial damages.

Before soliciting business or advertising services in Louisiana, a firm must file a copy of the surety bond with the state. The contractor or subcontractor can end the bond with 60-day notice to the state in writing. However, liability continues until that 60-day period expires.

Legal penalties

The state can require a contractor or subcontractor to buy a new bond if the current insurance does not meet the legal claims against the firm. Failure to adhere to the Louisiana laws about surety bonds can result in misdemeanor charges. The responsible party found guilty of a violation could receive up to six months in jail and a fine of up to $500.

Construction disputes involving surety bonds can be complex. If you are a new firm doing business in Louisiana, a professional can advise you of the consequences that can arise when a third party files a claim against your surety bond. You have the right to attorney representation in court if you and another party disagree about legal liability.

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