In California, "bonds and surety" essentially means a financial guarantee provided by a third-party company (the surety) to ensure that a business or individual (the principal) will comply with state laws and regulations, protecting consumers and other parties from potential harm if the principal fails to fulfill their obligations, often required for obtaining licenses or performing contracts, particularly in construction projects; essentially acting as a safety net for potential damages caused by non-compliance. ​

Key points about bonds and surety:​

• Purpose:
  To provide financial protection to the public by guaranteeing that businesses and individuals will complete projects as promised, pay subcontractors, and adhere to state regulations, especially in industries like contracting and licensing. 
• How it works:
  When a business or individual needs a bond, they apply through a surety company, who evaluates their financial standing and issues a bond for a specific amount. If the principal violates the law or fails to fulfill their contract, the affected party can file a claim against the bond, allowing them to recover damages from the surety company. 

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Common examples in California: 
Auto dealer bonds
Airline reporting corporation (arc) bond
Appeal bonds
Contractor license bonds
Auctioneer bond
CA contractor bonds
California bond of bail agent
California cannabis cultivation bond
California collection agency bond
California cslb contractors license bond
Fidelity bonds
Lost instrument bonds
Mortgage broker bond
Probate bonds​​

Why are bonds and surety important?: 

• Consumer protection:
  By requiring businesses to obtain bonds, California protects consumers from potential financial losses caused by irresponsible or fraudulent practices. 
• Compliance with regulations:
  Bonds act as a deterrent to non-compliance with state laws, as businesses know they could be held financially liable if they violate regulations. 
• Building industry stability:
  In construction, bonds provide assurance to project owners that contractors will complete the work and pay subcontractors, even if they encounter financial difficulties. 

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