What is "Consent of Surety"?

We often receive phone calls from our clients, with a hesitant, questioning tone to their voice, advising that they’ve been instructed to gain “Consent of Surety”, for one need or another. But what is “Consent of Surety”?

What is a ‘Consent of Surety’

In a nutshell, “Consent of Surety” refers to an official approval or agreement provided by the surety (the entity guaranteeing the bond) concerning any changes, modifications, or actions related to the bond or contract. It safeguards the principal and obligee, ensuring that the surety acknowledges and consents to any alterations or decisions made regarding the bond or underlying contract.

Essentially, this is the Obligee “checking in” with the Surety who wrote a Performance Bond and/or Labor & Materials Payment Bond, before the Obligee takes an action that may affect the surety. For instance, the Obligee may want to close out a contract for construction and make the final payment and/or release Retainage to the Principal. In this instance, the Obligee wants Consent of Surety before that payment is released, in case the Surety has had complaints from Subs and/or Suppliers related to the contract.

Another example could be a Consent of Surety to Change Order. Since a Contract/Performance/Payment bond guarantees an entire contract no matter what the bond says, if a contract has had multiple changes, or a large change, the Obligee might want to check in with the Surety before formalizing the change order.

When is Consent of Surety Typically Required?

The maze of contracts and bonds often leads to various scenarios where consent becomes imperative:

Contract Modifications / Change Orders: Any alterations to the original contract, such as scope, cost, or duration adjustments.
Additional Payment: In instances where the contract sum is subject to increase, ensuring the surety is aware and consents to this augmentation.
Final Payment: Sometimes, before the final payment is released to the contractor, consent ensures that the surety agrees to the payment being made and affirming that they will not be bringing forth any claims.

Integrity Surety is your bond department, and we write bonds in all 50 states. If an obligee asks for an AIA G707 – we know what that means. If an obligee has their own form, and that’s OK too. We’ll get it handled. Just give us a call or reach out online!