Types of Subdivision Bonds

Subdivision bonds come in different types, each serving a unique purpose. Here are the most common types of subdivision bonds:

Completion Bonds

Completion bonds guarantee that the developer will complete the construction of public improvements, such as roads, sidewalks, and drainage systems, in accordance with the approved plans and specifications. If the developer fails to complete the project, the bond company will pay the obligee (usually the local government) to complete the project.

Maintenance Bonds

Maintenance bonds ensure that the developer will maintain the public improvements for a specified period, usually one to two years, after the completion of the project. The bond company will pay for any necessary repairs during this period.

Performance Bonds

Performance bonds are similar to completion bonds, but they cover the entire construction project, not just the public improvements. They ensure that the developer will complete the project according to the contract and specifications. If the developer fails to complete the project, the bond company will pay the obligee to complete the project.

Payment Bonds

Payment bonds guarantee that the developer will pay all subcontractors, suppliers, and laborers involved in the project. If the developer fails to pay, the bond company will pay the claimants.

Subdivision Bonds

Site Development bonds are a combination of completion, maintenance, and performance bonds. They ensure that the developer will complete the public improvements, maintain them for a specified period, and complete the entire project according to the contract and specifications. If the developer fails to meet any of these obligations, the bond company will pay the obligee to complete the project.

It is important to note that the specific requirements for subdivision bonds vary by state and local government. Developers should consult with their bond agent and local government officials to determine the appropriate type and amount of bond required for their project.