Which type of bond keeps the property free of liens and unpaid subcontractors and suppliers?

A payment bond specifically serves the purpose of ensuring that subcontractors and suppliers are paid for their contributions to a construction project. This type of bond guarantees that the contractor will pay all labor and materials supplied for the work, effectively protecting the property from liens that could arise due to unpaid bills. If the contractor fails to meet these payment obligations, the surety company that issued the bond will cover the unpaid amounts, thereby preventing any potential legal claims or liens against the property.

In contrast, a performance bond primarily guarantees that the contractor will complete the project according to the agreed terms and conditions. It does not directly address the financial commitments to subcontractors and suppliers. A surety bond is a broader term that encompasses various types of bonds including payment and performance bonds. A bid bond, on the other hand, is a guarantee that a contractor will honor their bid if selected for the project and does not relate to payment obligations for labor and materials once the project is underway. Thus, a payment bond is essential for maintaining a clear title to the property by ensuring all financial obligations to subcontractors and suppliers are met.