Understanding Performance Bonds and How They Are Used

Holding more than 30 years of experience in business across a variety of industries, Gregor Gregory founded and served as president of AAUG Realty until 2009. In addition to his time working with AAUG Realty, Gregor Gregory currently serves as director of Northernlight, another company that he founded that specializes in the international construction market. Northernlight provides bond solutions to international clients as a monoline insurance company, and offers a range of products, including maintenance, bid, and performance bonds.

A performance bond can also be called a contract bond, and refers to a bond issued by one party involved in a contract to protect against the failure to meet certain obligations by the other party in the contract. In most circumstances, performance bonds are issued by a bank or other financial institution (like an insurance company) as insurance that a contractor will complete a specified construction project.

Performance bonds are quite common in the fields of real estate and construction. Developers are often required to ensure that project managers and contractors provide performance bonds, usually at the request of the owner or investor, ensuring the value of the project is not lost.

Another common use for performance bonds is in commodity contracts. In this case, the seller is asked to provide a performance bond to the buyer, ensuring some compensation to the buyer if the commodity is not actually delivered to them. In both cases, performance bonds help to protect one party from the failure of the other party to deliver on their end of the contract, offering compensation to cover any financial losses incurred.

Purchasing a Townhouse

The founder and former president of AAUG Realty, Gregor Gregory is a business leader with a background in property insurance. At AAUG Realty, Gregor Gregory led the company’s land acquisitions and townhouse developments. He also oversaw the sale of these townhouses.

Townhouses have found a new popularity in the past couple of years, accounting for 13 percent of all new construction in 2019, according to Bankrate, a consumer financial services company. Townhouses are multi-floored properties that share one or two walls with adjacent homes. Each townhouse has its own entrances and outdoor space. In urban environments, townhomes usually have a uniform look and are maintained by a homeowner’s association.

Townhouses are often less expensive than traditional single-family homes, and they need little maintenance (homeowners’ associations take care of that). However, townhouse owners may have to put up with noise from their neighbors, and older residents may not be comfortable with multi-floor living.

If you decide to purchase a townhouse, consider in-house features as well as community amenities, and find out if there is a homeowner’s association and how restrictive its policies are. During your site visit, evaluate the extent of noise pollution in the house, assess the state of common areas, and talk to neighbors to uncover issues you may want to know about before buying.