Bonding Requirements for Trade Subs: What JK Prestige Requires and Why

Bonding is one of the most misunderstood requirements in the GC-subcontractor relationship. General contractors on public projects in Florida are required to carry payment and performance bonds by law (Florida Statute 255.05 for public construction). On private commercial projects, bonding is negotiated. Many GCs skip it entirely on private work because it adds cost and creates friction at subcontractor qualification.

That is a mistake that occasionally becomes an expensive one.

What Bonds Actually Do

A performance bond guarantees that the sub will complete the contracted scope. If the sub defaults — abandons the project, goes out of business mid-project, or is terminated for cause — the surety steps in to either fund the completion with a replacement contractor or pay the GC the cost to complete.

A payment bond guarantees that the sub pays its own suppliers and lower-tier subs. This protects the GC from materialman liens filed against the project by vendors who supplied materials to the sub but were not paid.

Without a payment bond, a sub's financial trouble becomes the GC's legal problem. Florida's lien law (Chapter 713) allows unpaid suppliers and lower-tier subs to file liens directly against the owner's property, even if the GC paid the sub in full. A payment bond cuts off that lien exposure.

When JK Requires Bonds from Trade Subs

JK Prestige structures bonding requirements based on contract value and project type:

Always required:

• Mechanical, electrical, and plumbing subs on commercial projects over $500,000
• Any single-trade sub whose contract represents more than 15 percent of the total project value
• All subs on publicly funded projects (required by Florida Statute 255.05)

Evaluated case-by-case:

• Subs on commercial projects between $150,000 and $500,000 trade contract value — JK evaluates based on the sub's financial history, prior project track record, and the criticality of that trade to the project schedule
• Specialty trades (MEP on complex projects, structural steel, curtainwall)

Generally not required:

• Trade subs on residential renovation projects under $50,000
• Familiar trade partners with multi-year performance history on JK projects

What a Bond Costs and Who Pays It

Bond premiums are set by the surety and vary based on the sub's creditworthiness and the project risk profile. Typical ranges:

• A-rated sub with clean credit: 0.5 to 1.5 percent of contract value
• B-rated sub or new sub without established bond history: 1.5 to 3.0 percent of contract value
• Sub that cannot obtain a bond: this itself is useful information (see below)

On a $400,000 MEP subcontract, a bond premium runs $2,000 to $6,000. JK's position: the bond premium is a cost of doing the project correctly, not an optional add. When bonding is required, it is included in JK's subcontract and the sub is expected to carry it in their bid.

If a sub's bid does not include bonding and JK's scope requirements include it, the sub's bid is not apples-to-apples with a bid that does. JK notes this at bid review and requests a revised bid with bonding included.

If a Sub Cannot Get Bonded: What That Tells You

The surety industry is the original project underwriter. If a sub cannot obtain a performance and payment bond from a licensed surety, it typically means:

• The sub's financial position is too thin to satisfy the surety's collateral requirements
• The sub has a claims history (previous defaults, incomplete projects, surety losses)
• The sub is too new to have established a credit record with sureties

Any of these conditions should give a GC pause before awarding a significant subcontract. A sub that cannot get bonded is a sub that a neutral third party has assessed as financially risky.

This is not an automatic disqualifier — JK has worked with strong subs who simply had not yet established a bond relationship. But it is a flag that triggers additional pre-qualification: financial statements, bank references, list of current projects and their remaining backlog.

How Bonding Interacts with Subcontract Language

A bond is only as useful as the subcontract it is attached to. If the subcontract does not clearly define the scope, schedule, and payment milestones, the bond becomes harder to call. Sureties investigate claims carefully before paying — a vague subcontract gives the surety room to dispute the claim.

JK's subcontracts are written with specific scope attachments, a defined schedule of values, clear payment milestones, and a defined default and cure process. The bond attaches to that contract and the surety's obligation is defined by its terms.

Alternatives When Bonding Is Not Practical

On smaller commercial subcontracts or residential scopes where bonding is not practical, JK uses other protection mechanisms:

Joint check agreements. JK and the sub agree that material suppliers will be paid by joint check (cosigned by both JK and the sub), ensuring that materials are actually paid for and cannot generate a lien.

Retainage. JK holds 10 percent retainage on subcontract payments through substantial completion. Retainage creates an incentive for the sub to finish the project and provides a reserve against the cost of corrections.

Conditional final payment. The final payment to the sub is conditioned on a lien release and waiver from the sub and, on larger projects, from any known material suppliers.

These mechanisms do not replace a bond, but they reduce lien exposure and create financial accountability on smaller projects where full bonding is disproportionate.