Subdivision
Subdivision Bond
A subdivision bond guarantees to a city or county that a developer will build, and then maintain for a set period, the roads, drainage, and utilities in a new subdivision.
- Required by
- City and county planning or engineering departments
- Bond amount
- Set by whoever requires the bond. We confirm it.
What this bond guarantees
The local government is the obligee. The performance part promises the public improvements will be finished to the approved plans so lots can be recorded or sold before construction ends. The maintenance part promises repairs to defects during the warranty period after the improvements are accepted.
Who needs it
- Land developers
- Homebuilders recording a plat before improvements are finished
- Site contractors working for developers
What the underwriter looks at
- Developer's financial statements and liquidity
- Cost of the remaining improvements
- Developer's track record on prior subdivisions
Requirements vary by state and by who asks for the bond. Send us the request you received and we will confirm exactly what it calls for.
Common questions
Why does the county want a bond?
It lets you record the plat and sell lots before the streets and utilities are finished. If you do not finish, the county uses the bond to complete them.
Is the maintenance bond separate?
Often yes. After the county accepts the improvements, it may require a smaller maintenance bond for a warranty period, commonly one or two years. Check your local subdivision regulations.