Maintenance Bond

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Maintenance Bond

A bond that one company issues to another guaranteeing repayment in case some project fails to work properly after a certain period of time. For example, if a company hires a firm to build industrial equipment for a factory, the firm may issue a maintenance bond to the company. If the equipment is not constructed according to specifications and therefore does not function correctly, the company will not incur any losses because the firm must repay the bond. This reduces the risk to the bondholder that another party to a contract will not fulfill its obligations.
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References in periodicals archive ?
Moody's Investors Service has assigned a Aa2 enhanced rating to Red Lake Falls Independent School District 630's, (MN) $3,540,000 General Obligation Facilities Maintenance Bonds, Series 2016A and $388,000 General Obligation Tax Abatement Bonds, Series 2016B.
There's a lot wrong with this picture, beginning with the banks and mortgage companies, who have no business passing on the cost of maintenance bonds. Such monies are posted for the sole purpose of ensuring that properties are properly maintained, and are, after all, refundable.
Labor and Material Payment/Performance/ Maintenance Bonds
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