What type of bond guarantees that all materials will be paid by a contractor upon completion?

The type of bond that guarantees that all materials will be paid for by a contractor upon completion is known as a Payment Bond. This bond ensures that a contractor fulfills their financial obligations to suppliers and subcontractors during a project, thereby guaranteeing timely payment for labor and materials used in the construction. By securing a Payment Bond, the contractor provides assurance that all debts related to the project will be settled, protecting the interests of the project stakeholders, such as suppliers and laborers.

This bond is particularly important in the construction industry as it mitigates the risk of lien claims against the property being developed, and it promotes trust and reliability in financial dealings among contractors, subcontractors, and suppliers. It is distinct from other types of bonds that may pertain to the overall performance of the contract or the guarantee of completion, thus highlighting its specific focus on payment obligations.