Safeguarding Municipalities & Property Buyers
Typically, when developing a new subdivision or improving land for future homes, local municipalities will want some kind of assurance that the promised public improvements will be completed. Subdivision bonds do precisely that! These surety bonds act as a financial guarantee, protecting cities, counties, and future property buyers in the event that a developer fails to finish necessary infrastructure, such as roads, sidewalks, utilities, grading, sewers, etc.
Here at King Risk Partners, we help developers, builders, and landowners secure subdivision bonds quickly with guidance from a skilled team that understands what municipalities require and has experience in the contract bonding process. Contact us today to speak with one of our agents and take the first step toward securing your subdivision surety bond!
What Is A Subdivision Bond?
A subdivision bond, also known as an improvement bond, is a type of contract bond required by some state and local governments when a developer or property owner wants to subdivide land or construct public improvements as part of a residential or commercial development. This bond serves as a guarantee that the developer will complete all required improvements listed in the development agreement or plat approval. If the developer fails to complete the work, the local or state government can file a claim against the bond to recover any monetary damages or cover the costs of completing the improvements.
Subdivision Bonds vs. Performance Bonds
While many use the terms “subdivision bonds” and “performance bonds” interchangeably, they serve very different purposes in the construction and development world. Subdivision bonds are required by municipalities to ensure developers complete all public improvements associated with a new subdivision, including roads, sidewalks, drainage, and utility work. A performance bond, on the other hand, is typically required by a project owner and guarantees that a contractor will complete a construction project in accordance with the agreed contract terms.
Frequently Asked Questions
If you’re submitting plans for plat approval, requesting permits related to development, or creating new lots, there’s a chance your municipality will require a subdivision bond. Basically, these bonds are most commonly required when a developer wants to build a subdivision or make public-use improvements before the local government officially accepts the work.
The exact cost of a subdivision bond, also known as the bond premium, varies depending on several factors. Fortunately, premiums are only a small percentage of the total bond amount. Some factors that can affect your premium include:
- Financial strength and credit history
- Estimated cost of the project
- Work history and reputation
- Duration and complexity of the project
Yes, you can still get bonded with bad credit. While strong credit health tends to qualify applicants for a lower premium, developers with less-than-perfect credit can still obtain a subdivision bond — it’s just that they may pay a bit more. Here at King Risk Partners, we have experience helping developers with varying credit backgrounds secure subdivision bonds quickly and affordably.
Call King Risk Partners! The knowledgeable team at our insurance company is experienced in the contract bonding process and can help you obtain a subdivision bond at a great price. Take the first step towards getting bonded — contact King Risk Partners today!