When a Surety Bond is canceled, which of the following is true?

When a Surety Bond is canceled, it is essential that legal notification procedures are followed to ensure that all parties involved are informed appropriately. This practice preserves the rights and responsibilities of all parties associated with the bond, including the principal (the party obtaining the bond), the surety (the guarantor), and the obligee (the party who is protected by the bond).

Failure to follow legal notification procedures can lead to misunderstandings or disputes regarding the bond's status and obligations. By ensuring that all necessary parties are notified according to legal requirements, the cancellation process can be handled effectively, and liability can be properly addressed.

In contrast, the other options do not accurately reflect the typical outcomes associated with the cancellation of a Surety Bond. For example, the notion that a bond remains valid for ongoing projects is misleading as cancellation typically terminates the bond's effectiveness. Similarly, while bonds can sometimes be reinstated under specific conditions, this is not a guaranteed process and typically requires additional steps. Lastly, the automatic reimbursement of the principal by the surety does not occur upon cancellation; any financial responsibilities need to be settled according to the terms of the bond agreement or as required by law.