The Risks of Checks vs. Bonds

When bidding a job, contractors often choose to bid with a cashiers check in lieu of a bid bond. Often, project owners require this type of bid security to cover any costs associated with a re-bid (if necessary), or to pay the difference for using the next lowest contractor. However, this method can pose significant risks to the contractor, and is not recommended.

A recent case in Bloomington, IL illustrates the point perfectly — when Di Paolo Construction Company failed to meet the city’s requirements and deadlines, they lost their $450,000 cashier’s check to the city! The contractor had to forfeit his check because he was unable to obtain a required performance bond.