What is a Subdivision Bond?

A subdivision bond is a bond that guarantees the completion of improvements made to subdivision property such as gutters, sidewalks, curbs, sewers, utility lines and others, in accordance with regulations.

Builders, developers and individual landowners will often be required to post subdivision bonds when making such improvements. The bond is most often posted at the time when lot maps (also known as plats) are filed or building permits are acquired. While subdivision improvement work is made to public property, it is usually made at the expense of the builder or developer.

A subdivision bond, like other construction bonds, is a three-party agreement made between the obligee (city, county or state), the principal (the developer or builder) and the surety (the company underwriting the bond).

The surety’s role is to guarantee that if the principal defaults and fails to complete or make the necessary improvements, the surety will cover for the remaining work and any damages and losses sustained.

In case of a claim, the developer or builder has to indemnify the surety for any such payments. It is therefore best to avoid claims altogether.

Site Improvement Bonds Vs. Subdivision Bonds

Subdivision bonds are sometimes mistaken for ‘site improvement bonds’. The most significant difference between these is that the former are used for residential building, while site improvement bonds are used for Non Residential work (Churches, Strip Malls, Hospitals). Both bond types use the same application and have similar underwriting criteria.

Subdivision Bond Cost

As with other surety bonds, contractors pay only a fraction of the full bond amount - a so-called premium. The total bond amount required by the obligee depends on the size and duration of a project, and state requirements for a subdivision bond.

Then, depending on the total amount, contractors need to pay a premium, which is determined, among other things, on the basis of their personal credit score. If your credit score is high, you have good financial standing and solid business and personal assets, you are likely to qualify for standard market rates on your subdivision bond. These rates are between 1%-3% of the total bond amount.

Subdivision bond cost is project specific but if you improve your credit score over time, the rate on your subdivision bonds will also improve. Another important consideration when obtaining your bond is the surety company you work with.

Working with Bryant Surety Bonds means you’ll have access to exclusive subdivision bond rates, through our network of professional A rated and T-listed surety companies.

Get Your Subdivision Bond Fast

Getting your subdivision bond is easy. To get started, you simply need to follow the steps in our subdivision bond application. You’ll be asked to submit a number of documents that are needed for the underwriting of the bond. Once you’ve submitted all needed information, our surety bond experts will contact you shortly.

You can also call us anytime at (866)-450-3412 if you have any questions or need more information about your subdivision bond. Our surety bond experts will gladly assist you.