AFSB 152
COMPLETE QUESTION SET WITH VERIFIED
SOLUTIONS GRADED A+
Question 1.
Construction mortgage
ANSWER
Financing during construction, often interest-only during the construction period.
Question 2.
Design/build contractor
ANSWER
Contractor responsible for both designing and building the project.
Question 3.
Partnership
ANSWER
A for-profit business owned by two or more persons sharing profits and losses.
Question 4.
Open joint venture
ANSWER
All co-venturers are disclosed and named in the contract and bond.
Question 5.
Lenders bond
ANSWER
Completion bond guaranteeing project completion for a lender; also called mortgagors
completion bond.
,Question 6.
Expense reserve
ANSWER
Estimated expenses to handle bond obligations and claims.
Question 7.
Bonus clause
ANSWER
Provides incentive payment for exemplary performance.
Question 8.
Permanent mortgage
ANSWER
Financing after construction is complete, usually requiring principal and interest payments.
Question 9.
Indemnitor
ANSWER
Party agreeing to reimburse or protect the surety from loss.
Question 10.
Change order
ANSWER
Written approval from the owner and architect modifying contract scope, price, time, or
substance.
Question 11.
Obligee
ANSWER
The party protected by the surety bond; usually the project owner.
, Question 12.
Force majeure clause
ANSWER
Protects parties unable to perform due to causes outside their control.
Question 13.
First-tier claimant
ANSWER
Claimant contracting directly with the prime contractor.
Question 14.
Payment bond claim
ANSWER
Claim by covered laborer, subcontractor, or supplier for nonpayment.
Question 15.
Principal
ANSWER
The party whose obligation or performance is guaranteed; usually the contractor.
Question 16.
Bid bond
ANSWER
Guarantees that the bidder will sign the contract and provide required final bonds if awarded
the job.
Question 17.
Quia timet
ANSWER
Equitable relief sought because the surety fears irreparable harm unless principal acts.
COMPLETE QUESTION SET WITH VERIFIED
SOLUTIONS GRADED A+
Question 1.
Construction mortgage
ANSWER
Financing during construction, often interest-only during the construction period.
Question 2.
Design/build contractor
ANSWER
Contractor responsible for both designing and building the project.
Question 3.
Partnership
ANSWER
A for-profit business owned by two or more persons sharing profits and losses.
Question 4.
Open joint venture
ANSWER
All co-venturers are disclosed and named in the contract and bond.
Question 5.
Lenders bond
ANSWER
Completion bond guaranteeing project completion for a lender; also called mortgagors
completion bond.
,Question 6.
Expense reserve
ANSWER
Estimated expenses to handle bond obligations and claims.
Question 7.
Bonus clause
ANSWER
Provides incentive payment for exemplary performance.
Question 8.
Permanent mortgage
ANSWER
Financing after construction is complete, usually requiring principal and interest payments.
Question 9.
Indemnitor
ANSWER
Party agreeing to reimburse or protect the surety from loss.
Question 10.
Change order
ANSWER
Written approval from the owner and architect modifying contract scope, price, time, or
substance.
Question 11.
Obligee
ANSWER
The party protected by the surety bond; usually the project owner.
, Question 12.
Force majeure clause
ANSWER
Protects parties unable to perform due to causes outside their control.
Question 13.
First-tier claimant
ANSWER
Claimant contracting directly with the prime contractor.
Question 14.
Payment bond claim
ANSWER
Claim by covered laborer, subcontractor, or supplier for nonpayment.
Question 15.
Principal
ANSWER
The party whose obligation or performance is guaranteed; usually the contractor.
Question 16.
Bid bond
ANSWER
Guarantees that the bidder will sign the contract and provide required final bonds if awarded
the job.
Question 17.
Quia timet
ANSWER
Equitable relief sought because the surety fears irreparable harm unless principal acts.
