Condominium Association Bond

Condominium unit owners are required to purchase financial guarantee bonds in Virginia pursuant to the Virginia Condominium act to protect a condominium association by transferring to a surety bond company the cost of ensuring the members of the association are compensated for damages resulting from a unit owner failing to provide payment of assessments. The surety company provides the association a guarantee (the surety bond) that the association will receive payment for financial damages due to a violation of the Virginia Condominium Act referenced in the bond form up to a limit specified in the bond (“penal sum” or “bond amount”). Ultimately, condo unit owners are responsible for assessment payments and required by law to reimburse the surety company for any payments made under the bond or face civil action.