Texas · Project bonds
Texas Performance Bond
Yes. Texas requires a performance bond on public work contracts over $100,000.
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Estimated at 3% of the bond amount. The bond amount is usually 100% of the contract price and is stated on the bond form.
3% of a $50,000 bond. This is an estimate, not a quote. Final approval and pricing are subject to underwriting.
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Performance Bond in Texas
Texas has no statewide general contractor license. Electrical, HVAC, and some other trades are licensed by the state, and many cities and counties set their own registration and bond rules. Public works contracts follow a state bonding law.
Texas public work performance and payment bond law (Tex. Gov’t Code ch. 2253). Texas requires a performance bond and a payment bond on public work contracts above set dollar amounts.
A performance bond is a surety bond that guarantees a contractor will complete a project according to the contract. If the contractor defaults, the surety can finance the completion, bring in another contractor, or pay the owner up to the bond amount.
What a performance bond guarantees
The bond guarantees that the work will be completed under the contract documents. It covers the contractor failing to finish, abandoning the job, or defaulting in a way that the owner has the right to terminate.
It protects the owner from the cost of a failed project. It does not protect you. If the surety pays or finishes the work, it recovers its cost from you through the indemnity agreement.
When a performance bond is required
Federal construction contracts above the Miller Act threshold require performance and payment bonds. Most states have similar laws for public works, usually called Little Miller Acts, with their own contract thresholds.
Private owners and lenders can also require a performance bond in the contract. It is common on commercial work, development projects, and any job where a failure would be costly.
How the surety responds to a default
After a valid default termination by the owner, the surety investigates and chooses a remedy. It can complete the work itself, hire a replacement contractor under a new agreement, let the owner finish and pay the excess cost, or pay the owner up to the bond amount.
In every case the surety cost is the surety loss. This is why sureties underwrite the contractor carefully before issuing a bond.
How it works
How to get a performance bond in Texas
Share the contract
Send the project name, owner, contract value, and the bond form required by the owner.
Submit your financials
Provide a company financial statement, work-in-progress schedule, and resumes. Smaller bonds can require less.
Underwriting review
An underwriter reviews the contractor and the contract and sets the premium. Most reviews take one to three business days.
Sign, pay, and receive the bond
Sign the indemnity agreement and pay the premium. The executed bond is delivered for the owner.
Cost
What a Texas performance bond costs
Performance bonds are generally 3% of the bond amount. Payment and maintenance bonds are usually included with the performance bond. Enter the bond amount from your bond form to estimate your premium. Final approval and pricing are subject to underwriting.
What underwriters review
- Contract price and project type
- Contractor credit and financial strength
- Experience on similar projects
- Length of the project and warranty period
- Whether the bond is paired with a payment bond
Who to contact
Texas licensing authority
Sources: Texas Department of Licensing and Regulation; Texas Statutes. Requirements change. Confirm with the agency before you buy.
Other contractor bonds in Texas
Contractor License Bond
Required by your state or city before you can get or renew a contractor license.
Bid Bond
Guarantees your bid. If you win and walk away, the owner is paid the difference.
Payment Bond
Guarantees you will pay your subcontractors, laborers, and suppliers.
Maintenance Bond
Covers defects in materials or workmanship after the project is finished.
Texas performance bond questions
When is a performance bond required on Texas public work?
Texas requires a performance bond on public work contracts above $100,000. Smaller contracts can still require one in the bid documents.
Is a performance bond required in Texas?
Yes. Texas requires a performance bond on public work contracts over $100,000.
How much does a Texas performance bond cost?
Performance bonds are generally 3% of the bond amount. Payment and maintenance bonds are usually included with the performance bond. Enter the bond amount from your bond form to estimate your premium. Final approval and pricing are subject to underwriting.
What is a performance bond?
A performance bond guarantees a contractor will complete a project under the contract. If the contractor defaults, the surety makes sure the project is finished or pays the owner up to the bond amount.
How much does a performance bond cost?
Generally 3% of the bond amount. A $50,000 performance bond costs about $1,500. The bond amount is on the bond form and is usually 100% of the contract price. Payment and maintenance bonds are usually included.
How much is the performance bond amount?
Usually 100% of the contract price. Some owners accept a lower percentage. The contract and bid documents state the requirement.
Are performance and payment bonds the same?
No, but they are usually issued together. A performance bond protects the owner from a failure to complete. A payment bond protects subcontractors and suppliers from nonpayment.
How long does it take to get a performance bond?
Typically one to three business days once underwriting has what it needs. New bonding relationships take longer than repeat accounts.
Can new contractors get a performance bond?
Yes. Smaller projects often qualify with personal credit and a basic financial statement. Larger bonds need stronger financials and experience.
What happens if I default on the project?
The owner can claim on the bond. The surety investigates and may complete the work, hire another contractor, or pay the owner. You are responsible for reimbursing the surety.
Performance Bond in other states
Don't see your state? Contact us or browse all contractor bonds.