AIA A313 Warranty Bond: Form, Penal Sum, and Claims

The AIA A313 warranty bond is a three-party surety instrument in which a surety company guarantees that a contractor (the Principal) will perform the warranty obligations it owes the project owner (the Obligee) under the construction contract after the work is finished. Coverage begins at final completion and runs for a default term of two years.¹

What the Bond Guarantees

The A313 bonds the contractor’s warranty obligations as defined in the construction contract. Whatever the contract says the contractor must warrant, the bond backs. It does not expand those obligations. If the contract’s warranty clause is narrow, the bond is narrow with it.²

Several categories of problems fall outside the bond:

Normal wear and tear from ordinary use.
Damage caused by the owner’s misuse, neglect, or failure to maintain the property.
Warranties provided directly by the contractor’s suppliers and manufacturers on installed equipment or materials; the bond language excludes direct supplier warranties.³
Design defects, generally, unless the contractor was also responsible for the design.
Warranties imposed by state statute rather than written into the contract; whether these are considered bonded is an open legal question.³

The warranty period runs from final completion, not substantial completion. Substantial completion means the work is finished enough for the owner to use it for its intended purpose; final completion means every punch-list item and contractual requirement has been satisfied. The two-year clock does not start until the project crosses that final threshold.¹ The two-year default applies even when the construction contract calls for a longer warranty, unless the parties negotiate a different term in Section 16 of the form.³

Where to Get the Form

A313 is a proprietary AIA form sold only through the AIA Contract Documents online platform at aiacontracts.com. You can buy a single-use license or an annual subscription that gives unlimited access to the full library of more than 300 AIA documents.⁴ The platform is cloud-based and built around Microsoft Word, so you fill in fields, make edits, and export the finished bond as a Word file or PDF.⁵

Information You Need to Complete It

The header fields identify the parties and the project. Fill in the full legal names and addresses of the contractor, the surety, the owner, the owner’s representative, and any agent or broker. The AIA instructions stress using the parties’ formal registered names and legal status (corporation, LLC, partnership) exactly as registered.⁶

You also describe the construction contract by its date, the official project name, and the project location, matching the construction contract itself.⁶ A misspelled company name or a wrong date can create ambiguity that weakens enforceability later.

Setting the Penal Sum

The Penal Sum is the maximum dollar amount the surety will pay if the contractor defaults on warranty obligations. The form itself does not prescribe a formula; it just ties coverage to the contractor’s warranty obligations in the construction contract.⁷ In practice, warranty bond penal sums are commonly set between 10% and 25% of the total contract price, well below a performance bond, which on federal projects typically sits at 100%. The right figure depends on the project’s risk profile: type of construction, complexity of installed systems, and length of the warranty period.

Term

Leave the term at two years from final completion or write a negotiated period into Section 16. If your underlying contract warrants work for longer than two years, you have to extend the bond expressly; the default will not do it for you.

Signing and Verifying the Executed Bond

Both the contractor and the surety must sign. The form includes signature blocks for each, and both blocks call for a corporate seal.⁸ The surety’s signature is usually provided by an authorized agent rather than a corporate officer. That agent must attach a power of attorney issued by the surety company proving authority to bind the surety on this bond.⁶

When you receive the executed bond, check three things. The power of attorney is current. The bond amount falls within the agent’s binding authority; a bond signed above that limit can be challenged. And the surety is licensed to write bonds in the state where the project sits, with an acceptable A.M. Best or equivalent rating. Section 16 provides space for supplemental signature blocks if additional parties need to sign or if the bond is modified later.

What It Costs and Who Pays

The contractor pays the premium, and the cost is usually folded into the overall project price. Premiums are calculated as a percentage of the Penal Sum, typically 0.5% to 4% for contractors with solid credit and financial standing.⁹ A contractor with weaker finances or a short track record may pay more or have to pledge collateral.

To underwrite, the surety reviews the contractor’s credit report, business financial statements, bank statements, and trade references, and weighs project-specific risk. A straightforward commercial buildout underwrites more cheaply than a complex mechanical or electrical installation. Longer warranty periods and larger penal sums push the premium up.

Making a Claim: the Default Procedure

Before the surety owes you anything, Section 3 requires a three-step procedure. Skipping steps does not automatically release the surety; under Section 4, the surety has to show it was actually harmed by the procedural failure. Following the process correctly removes the argument.⁸

Notice of intent. Send written notice to the contractor and the surety stating that you intend to declare the contractor in default. The notice must be sent during the term of the bond.
Reasonable cure period. Give the contractor a reasonable amount of time to fix the defective work. The bond does not define a specific number of days; what is reasonable depends on the scope and nature of the defect.
Declaration of default. If the contractor fails to remedy within that period, formally declare the contractor in default and notify the surety in writing.

All notices must be in writing and sent to the addresses listed on the first page of the bond.⁸ Certified mail with return receipt is the safest route because it creates a dated record of delivery.

Build the evidence file as the problem develops, not after you declare default. Timestamped photographs, independent inspection reports, expert evaluations tying the defect to specific contract requirements, your written communications with the contractor, and written repair estimates from qualified contractors give the surety what it needs to evaluate the claim against the Penal Sum.

What the Surety Does Next

Once you have completed the three-step procedure, Section 5 obliges the surety to “promptly” remedy the default at its own expense. With your consent, the surety may bring the original contractor back to perform the corrective work. In practice, the surety often hires a replacement contractor, particularly if the relationship with the original has broken down.⁸

The bond does not fix a number of days; it uses a reasonable promptness standard. If the surety fails to act promptly, Section 6 gives you a remedy. Send an additional written notice demanding performance. If the surety still does not act, it is deemed in default on the bond seven days after receiving that second notice, and you can pursue any available legal remedy, including hiring your own contractor and suing the surety for the cost up to the Penal Sum.⁸

The surety can deny the claim if its investigation concludes the defects fall outside coverage, for instance where damage resulted from normal wear, owner negligence, or a condition the contract’s warranty does not reach. A denial should come in writing with the surety’s reasoning.

Negotiating the Bond Before Work Begins

The protection a warranty bond gives you is set long before you file a claim. Negotiate the bond requirement into the construction contract at the outset. Because the bond covers only what the contract’s warranty provisions say, a well-drafted warranty clause directly strengthens the bond. If your contract calls for a warranty period longer than two years, address the extension in Section 16 of the bond form up front; the surety will likely charge a higher premium for the longer term.

1
AIA Contract Documents. Three Things About the AIA’s New Warranty Bond You May Not Know
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AIA Contract Documents. A313: Warranty Bond
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Fabyanske, Westra, Hart & Thomson. Initial Comments on the AIA A313 – 2020 Warranty Bond
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AIA Contract Documents. AIA Contract Documents
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AIA New York. Contract Documents
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AIA Contract Documents. Instructions: A313 – 2020, Warranty Bond
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AIA Contract Documents. Summary: A313 – 2020, Warranty Bond
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Swiftbonds. AIA Document A313-2020 – Sample
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Higginbotham. What Is a Warranty or Maintenance Bond