Mowing Contractors for public property often need mowing bonds such as bid bonds, performance bonds and payment bonds to guarantee their contractors. Learn more about these bonds, including how to obtain them. 

Why Do I Need a Mowing Bond?

Mowing on public property may require the mowing or landscaping company to provide a surety bond to guarantee the project. Contracts on Federal property with a value of $150,000 or more are required to be bonded under the Federal Miller Act. Many states and cities have adopted similar legislation and this applies to contractor mowing grass, brush and weeds as well. 

Mowing bonds are common for both state and Federal Department of Transportation contracts and many commercial contracts as well. Mowing contracts are considered a type of service contract which you can read more about here. 

What Does a Mowing Bond Guarantee?

There are four types of bonds that a mower may need. These are performance bonds, payment bonds, bid bonds and maintenance bonds. Each has a different type of guarantee. 

Mowing Performance Bonds

A Performance Bond for a mowing contract guarantees that the mowing contractor will fulfill the obligation of the contract. If the mower does not, a claim can be made against the bond company. 

For example, let’s say that a mowing contractor enters into a contract to mow along a stretch of highway for a period of one year. Six months into the contract, the mowing company goes out of business. A claim can then be made against the performance bond. The bond company in this scenario will have to find and pay a replacement contractor to complete the contract, finance the existing contractor, or pay the bond penalty. You can read more about performance bond claims here.

Mowing Payment Bonds

Mowing Payment Bonds guarantee that all suppliers and subcontractors on the project will be paid. Suppliers and Subcontractors generally cannot place a Mechanic’s Lien on public property. Therefore, mower payment bonds guarantee that those parties get compensated. 

Common suppliers on a mowing project include fuel suppliers, hauling/trucking companies, equipment rental, etc. Should one of these parties not get paid, they can make a claim against the mower’s payment bond.

Mowing Bid Bond

Mowing Bid Bonds guarantee that a mower will honor their bid price and enter into a contract for that price if it is awarded to them. Mower Bid Bonds serve as a form of prequalification for contractors. They also protect the letting by ensuring that a mower will honor their submitted bid. If they do not, a claim can be made against the bond. 

Mowing Maintenance Bonds

Maintenance Bonds for just mowing are rare. However, mowing contracts are often combined with landscaping and a maintenance bond may be required. Maintenance or Warranty Bonds guarantee that a project will be free from defects for a period of time. This can be tricky in mowing and landscaping. For example, if a maintenance bond guarantees that grass or plants will stay alive for a certain period, a contractor may need to frequently water the plants to fulfill the contract.

Underwriting Considerations for Mower Bonds

Surety Bond underwriters look at several risk factors for writing mowing bonds. These include the financial strength of the mowing contractor, experience, the contractor’s current and planned labor, the contractor’s equipment needs and the length of the contract.

Mower’s Financial Strength

Surety bond underwriters want to make sure that a mowing contractor can complete their obligation and pay their bills. They will often review a contractor’s personal and business financial statements looking for strong working capital, net worth and profitability. 

Experience

A second consideration will be the mower’s experience. A bond underwriter will want to see that a mower has completed similar projects in both scope and size. For example, it would be a big leap for a mower to go from mowing neighborhood lawns to fulfilling a large contract mowing busy highways.

Labor

Labor is a big consideration for bond underwriters in mowing contracts. For example, how many people will be needed to complete the contract? Does the mowing contractor have the labor currently or will they need to hire? If they are hiring, will they be able to get the labor at a price that allows profit? These are all questions the mowing contractor needs to prepare to answer. 

Equipment

Similar to labor is equipment. Does the mowing contractor have the equipment needed to complete the contract, or will they need to rent or purchase more equipment. If the contractor has the equipment, have they included maintenance and repair costs in their bid?

Length of the Contract

The length of the contract being bonded is often one of the most important considerations for surety bond underwriters. Bonding contracts for one season is usually relatively easy. However, longer term projects require more consideration. Time presents risk to both mowing contractors and their bond companies. 

Prices such as labor, fuel and equipment generally go up. The longer the contract, the stronger the mowing contractor will need to be financially. It is often a good idea to have escalation clauses in multi year contracts that compensates the contractor for price increases. 

Regardless of the strength of the contractor, surety bond companies generally prefer to keep a contract guarantee at two (2) years or less. If a longer contract is required, it is generally acceptable to add more years by the mutual agreement of both parties. For example, a mowing contractor may sign a two year contract with three additional years. Each additional year will be added by the mutual consent of both parties. This is a fair way to compensate the contractor and allow the public entity to easily fill their contracts.

How to Obtain a Mowing Bond

Mowing Bonds are easy to obtain for most parties. Contracts of one (1) year or less with a value of $500,000 or less can generally be obtained with just a quick credit check. Larger bonds are underwritten like contract bonds and  will generally require additional information including company and personal financial statements through a process known as the 3Cs.

Mower Bonds and the SBA Surety Bond Guarantee Program

For mowers that may not qualify in standard bond programs, the SBA Surety Bond Guarantee Program offers an option. Contractors can generally get approved in most circumstances as long as the contract is one year or less. Using the SBA program costs an addition 0.6% of the contract amount that is paid to the SBA, but it can be a great option to help mowing contractors who may have challenges qualifying for other bond programs. Mowing contractors can read more about the SBA Bond Program here.

How Much Do Mower Bonds Cost?

Mower surety bonds will cost between 0.5% – 4% depending on the financial strength of the contractor. They are priced like contract surety bonds and you can read more about pricing here. However, it is important to understand that the premium for these bonds will be due each year of the guarantee. A two year mower bond will have a cost for BOTH the first year and the second year. Mowing contractors need to include this cost in their bid.

Indemnity on Mower’s Bonds

Mowing contractors should understand that surety bonds require indemnity and are not insurance. This means that if a claim is made against any of the mower’s bonds, the surety bond company will seek to be reimbursed for the claim and costs. These bonds are not insurance. Mowers can read more about indemnity here.

Summary

Mowing Bonds may be required for commercial or public projects. Fortunately, these bonds are easy to obtain for most mowing contractors. Knowing the risks will help contractors avoid the pitfalls and ensure a successful contract. Mowers may also need license bonds in some jurisdictions. Many of these can be purchased instantly online by searching your state page here. Mowing contractors can also visit our Surety Bond FAQ page for common questions on surety bonds.

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Josh Carson, AFSB

Vice President at Axcess Surety

Vice President of Axcess Surety. Surety Bond and financial expert dedicated to helping contractors, businesses and individuals understand and obtain surety bond credit.

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