D. Surety's Remedies

• Library: SC Construction Law Desk Book (SCBar) (2013 Ed.)

D. Surety's Remedies

1. Remedies Against the Principal and Indemnitors⁹²

By virtue of its relationship with the principal and indemnitors, the surety is entitled to seek certain remedies against them when the surety has made payments or taken certain actions on behalf of the principal and indemnitors. These certain remedies include:

a. Reimbursement. When the surety satisfies its principal's obligation under a bond, the surety is entitled to reimbursement or repayment from the principal and the indemnitors.

b. Exoneration. Exoneration is the right of the surety to compel its principal or indemnitors to satisfy or pay an obligation owed to the obligee. In other words, the surety is entitled to request that the principal or indemnitors pay the obligee before the surety is required to expend its own funds.
c. Quia Timet. Quia timet literally means "because he fears," and it pertains to the right of the surety to seek court intervention and assistance in situations in which a debt has not matured but the surety believes the principal will be unable to pay the debt when it does mature. Several situations can arise when the surety can foresee a demand by the obligee on the surety for repayment. For example, a project may be going badly and the general contractor is losing patience with the principal, who is experiencing difficulty both in the timeliness and quality of work. The surety may suspect that the principal may eventually go bankrupt and be defaulted by the general contractor. Quia timet allows the surety to request that the court use its equitable powers to protect the surety, and the court may require that the balance of the unpaid contract funds owed to the principal be used only to pay for unpaid bills for labor and material on a project. This would prevent the principal from misappropriating the funds.
d. Subrogation. A surety that

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