Bonds: public entities as beneficiaries.

Senator Rubio's proposal would establish new requirements for bonds given to public entities in property-related contracts, requiring explicit agreement from public entity beneficiaries before bonds can take effect. The legislation addresses bonds related to the purchase, construction, expansion, improvement, or rehabilitation of real property and tangible personal property.

Under the proposed changes, public entities must agree to two specific conditions for a bond to become effective: making all payments directly to the principal (or to the surety if they assume completion responsibilities after a default), and fulfilling all contractual obligations owed to the principal. These requirements would apply regardless of other provisions in existing bond law.

The measure defines applicable contracts as written or oral agreements that obligate a principal to undertake property-related transactions. While the bill introduces new prerequisites for bond effectiveness, it maintains existing definitions of public entities from the Public Contract Code and contract terms from the Civil Code. The provisions would affect the relationship between public entities, principals, and sureties in property-related contracts without requiring new state appropriations.