What type of bond is obtained by a contractor or owner to guarantee that a project will be completed free of liens?

A completion bond is a form of surety bond that assures the lender or project owner that the contractor will complete the project according to the agreed terms and conditions. This bond specifically guarantees that the project will be finished on time and within budget, and it provides a level of financial protection against the contractor's failure to fulfill their obligations. In terms of project completion, a completion bond ensures that the owner will not face issues such as incomplete work or liens that may arise from unpaid subcontractors or suppliers.

Unlike other types of bonds, such as performance bonds, which primarily ensure that the work will be completed satisfactorily, or payment bonds, which guarantee that subcontractors and suppliers will be paid, the completion bond uniquely focuses on the overall completion of the project in accordance with the contract. This is particularly important for owners who want assurance that the project will be free from liens, which could complicate or delay the completion process and financial transactions related to the property.

While retainage bonds deal with the withholding of a portion of the contract price to ensure performance, they do not specifically guarantee the project completion in the same way as a completion bond. Therefore, the completion bond stands out as the appropriate choice for guaranteeing a project will be completed free of liens.