TL;DR
A bid bond is a surety instrument submitted with a contractor's proposal guaranteeing that, if selected, the bidder will sign the contract at the bid price and deliver the required performance and payment bonds. If the winner walks away, the surety pays the owner the difference up to the bond's penalty, customarily 5 to 10 percent of the bid amount.
What it means
A bid bond is a surety instrument submitted with a contractor's proposal guaranteeing that, if selected, the bidder will sign the contract at the bid price and deliver the required performance and payment bonds. If the winner walks away, the surety pays the owner the difference up to the bond's penalty, customarily 5 to 10 percent of the bid amount. Federal work requires them through the Miller Act, most public agencies follow, and large private owners often do as well. For owners, the surety's willingness to issue one doubles as a screen of the contractor's finances and capacity.
Where it sits in the glossary
Bid bond is part of the Legal group inside the ProFix Directory glossary. Browse every term in this category from the glossary index.
Why Ohio homeowners should know it
This is a term Ohio homeowners encounter when reading contractor quotes, hiring paperwork, or inspection reports. Understanding it well enough to ask one good follow-up question is usually all the protection a homeowner needs.
ProFix Directory keeps definitions short on the index page and saves the longer context — Ohio-specific rules, where the term comes from, and which ProFix tools touch it — for these per-term pages so the term is easy to cite and easy to share.
ProFix tools that touch this term
See also
License: CC-BY-4.0 — quote freely with attribution to ProFix Editorial Team / ProFix Directory.