Surety bonds in California are essentially used to guarantee individuals comply with laws set forth by the state. Each surety bond that’s issued is a legally binding contract that brings together three separate entities in an effort to protect consumers.
The principal is the business or individual that buys the bond to guarantee work performance.
The obligee is the government agency that requires the principal to be bonded.
The surety is the agency that sells the bond and backs its financial guarantee.
If the principal fails to fulfill the bond’s terms, then a claim can be made against the bond. If the claim is valid, then the principal will have to compensate the obligee for damages. If the principal cannot do so, the bond would require the surety to pay reparation up to the full bond amount.
It's to cover any excise tax liability to the state. They have to submit that by an insurer, I believe, along with the submitted application. Just another step closer to a decision being made.
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