Subdivision Bonds
More About
Subdivision Bonds
A subdivision bond guarantees that required land improvements within a subdivision will be completed to specifications and on time. If developers fail to meet these obligations, the public agency requiring the bond (the obligee) can file a claim for damages. Once the claim is validated, the surety compensates the obligee, and the developer (the principal) is held financially liable for reimbursing the surety.
When Do You Need a
Subdivision Bond?
Subdivision bonds are typically required by local government agencies before any work can begin on a development project. Delaying the bond process can result in project delays and legal penalties, so it’s crucial to secure a bond early.
Why Do You Need a Subdivision Bond?
For Obligees:
Ensures financial security for completing public infrastructure projects if a developer fails to perform.
For Principals
Demonstrates trustworthiness and adherence to legal requirements, fostering better business relationships and opportunities.
For Communities
Guarantees safe, durable infrastructure that meets local standards and serves residents.
Benefits of Subdivision Bonds
For Obligees
- Guarantees completion of critical infrastructure.
- Protects public funds from misuse.
- Ensures accountability from developers.
For Principals
- Builds trust with public agencies and communities.
- Encourages fair competition by keeping unscrupulous parties out.
- Provides a clear path for project approval and legal compliance.
Other Names for Subdivision Bonds
- Developer Bonds
- Land Improvement Bonds
- Site Improvement Bonds
- Plat Bonds
- Completion Bonds
- Performance Bonds
Key Parties in a Subdivision Bond
- Principal: The landowner or developer responsible for fulfilling the bond’s obligations and covering any valid claims.
- Obligee: The public agency requiring the bond to protect public interests in subdivision improvements.
- Surety: The underwriter issuing the bond, guaranteeing payment for valid claims, and recovering costs from the principal.
Types of Subdivision Bonds
Improvement Bonds
Purpose
Guarantee that developers complete public infrastructure improvements like roads, sidewalks, drainage systems, and utilities within a subdivision.
Key Attributes
Covers all necessary enhancements to make the land suitable for development, ensuring it meets local government standards.
Performance Bonds
Purpose
Ensure that the developer fulfills the entire scope of the project as per the contract, including timelines and specifications.
Key Attributes
Covers the completion of all improvements required by the local government.
Site Improvement Bonds
Purpose
Ensure completion of specific site improvements, often for private property developments, such as driveways, parking lots, or landscaping.
Key Attributes
Focused on non-public improvements tied to the project.
Maintenance Bonds
Purpose
Provide assurance that infrastructure improvements will remain in good condition for a specified warranty period.
Key Attributes
Protects municipalities from bearing the costs of repairs if issues arise after project completion.
Plat Bonds
Purpose
Guarantee that the developer will adhere to all the requirements associated with plat approval, such as utilities and land grading.
Key Attributes
Covers the completion of all improvements required by the local government.
READY TO SECURE YOUR SURETY BOND?
GET IN TOUCH
Contact Info
5001 Spring Valley Rd., Ste. 500W
Dallas, TX 75244
P. O. Box 803506
Dallas, TX 75380
admin@towerstreetinsurance.com
469-788-8888
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