It is a bond created among three parties; the land lord, the tenant and the surety the underwriter. It creates a contract among all these parties to have a proper link.
This bond is issued to landlord in connection to cash security deposit, letter of credit, personal or corporate guarantee which serves as a security for the purpose of tenant’s full and complete performance of the terms and condition of commercial lease. This bond is similar in many aspects, both letter of credit and guarantee. In failure of the bond, the landlord submits the bond against a claim, which is paid by the surety underwriter as per the terms and condition of the lease. The landlord draws the lease money from the bank under a letter of credit.
In this bond, the surety underwriter is liable to the landlord and not the tenant for breach of the lease contract. The surety underwriter's responsibility on the lease bond is strictly monetary; the surety underwriter is generally not required to perform the unfulfilled non-monetary obligations of the tenant.
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