How to choose the right surety bond for your contract type: a practical guide for businesses. Types of surety bonds in Mexico

Two Latin American business professionals review and sign a contract in a modern office, symbolizing the trust and security provided by the right type of surety bond for every contract.

Types of surety bonds in Mexico. Choosing the right surety bond is a key decision for any company that signs contracts with authorities, clients, or suppliers. An incorrect choice can lead to rejections, payment delays, or contractual penalties.

At We Link , with over 30 years of experience in the surety sector, we've seen how good guidance can make the difference between a smooth process and a costly problem. That's why, in this guide, we explain how to identify the surety you really need depending on the type of contract.

1. Performance bond: the most common in works and services contracts

A performance bond guarantees that the contractor or supplier will execute the contract according to the agreed terms. It is the most frequently requested bond by government agencies, construction companies, and large private corporations.

Ideal for:

• Public works contracts.

• Service or supply contracts.

• Bidding processes with state or federal agencies.

Coverage: partial or total breach of contract. Typical percentage: 10% of the contract amount.

2. Advance payment bond: protection for funds delivered in advance

When the beneficiary hands over money or materials before the execution begins, the advance payment bond guarantees that those resources will be used correctly.

Ideal for:

• Contracts with financial advance (works, supplies).

• Infrastructure projects and public procurement.

Covers: misuse or lack of verification of the advance. Typical percentage: equal to the advance amount.

3. Guarantee of good quality or hidden defects

After the delivery of a project, many entities require a quality guarantee (also called a "hidden defects" guarantee) to cover subsequent defects or failures.

Ideal for:

• Construction or manufacturing contracts with subsequent warranty.

• Projects where maintenance or fault correction is required.

Covers: defects in materials, workmanship, or design. Typical warranty period: 12 to 24 months after delivery.

4. Tax bond: support before the SAT or authorities

Tax bonds guarantee tax obligations or credits determined by authorities. They are essential in tax protection or refund proceedings.

Ideal for:

• Companies with disputed tax credits .

• VAT refund requests.

Covers: payment of the tax credit in case of an unfavorable ruling. Requirement: must be issued with exact wording and a guarantor authorized by the Ministry of Finance and Public Credit (SHCP).

5. Judicial bond: when required by the legal process

In commercial, labor, or non-custodial criminal trials, the authorities may require a court bond . Its purpose is to guarantee payment for damages, losses, or compliance with court orders.

Ideal for:

• Commercial lawsuits with precautionary measures.

• Suspensions of challenged acts.

It covers: compliance with court rulings and any potential compensation.

6. Rental guarantee or housing surety

For rental contracts, the rental guarantee or housing surety insurance ( NOWO ) protects the landlord against non-payment or damages.

Ideal for:

• Owners of real estate or real estate companies.

• Tenants without a guarantor.

It covers: unpaid rent, property damage, and legal expenses. Additional benefit: 100% digital process and no guarantor required.

7. Credit guarantee or ZRS (Zero Risk Score)

The ZRS credit guarantee protects transactions where a company grants credit to individuals . Unlike traditional credit insurance, ZRS covers each transaction individually .

Ideal for:

• Financial institutions, leasing companies, and stores that sell on credit.

• Consumer startups or fintechs.

Coverage: Total loan default. Benefit: Issues automatic guarantees and reduces funding costs.

Quick comparison: what bond does your company need?

Type of Contract	Recommended Deposit	Covers	Typical Validity
Public works or services	Compliance	Proper execution of the contract	During the work
With financial advance	Advance	Proper use of the money given	Until verification
With later delivery	Good quality	Hidden defects or flaws	12–24 months
Tax procedure	Fiscal	Payment of the loan or guarantee to the SAT	According to procedure
Trial or legal process	Judicial	Compliance with resolutions	According to the ruling
Lease	Housing guarantee (NOWO)	Rents and damages	According to contract
Loans to individuals	ZRS	Total default	According to the loan term

Types of surety bonds in Mexico

Not all surety bonds are created equal, and choosing the wrong one can cost you time, money, and reputation. At We Link , we analyze your contract, assess the risk, and work with the country's leading surety companies to issue the ideal bond, on time and with full legal backing.

Your contract deserves the right guarantee. Contact us at www.welink.mx and get expert advice.