Michigan's public works bond statute (MCL 129.201, et seq) requires that contractors furnish a payment and performance bond for projects over $50,000. The bond must be executed by a surety authorized to do business in Michigan. Many contracts also require the surety to be listed in Treasury Circular 570. In 1993, the Michigan Supreme Court held in Kammer Asphalt Paving v East China Twp. that local governments contracting for improvements have a duty to verify the validity of bonds furnished by contractors [1].

So if you receive a contractor's payment and performance bond, how do you know whether it complies with these requirements? How can you check on a bonding company whose name doesn't sound familiar? How you verify the financial strength of a surety?

There are 3 ways to verify payment and performance bonds and the surety named on the bonds.