Subdivision/site improvement bonds
These bonds are required to be posted by developers, builders, and real estate investors. The bond guarantees that the public improvements in the development will be completed. This is required for both residential and commercial developments. The township, municipality, city, village, or state will act as the obligee (Owner) of the bond and is requiring the bond.
These are the types of improvements that will be bonded:
- Site work improvements
- Grading improvements
- Street & Paving improvements
- Water & sewer improvements
- Storm drain improvements
- Landscaping improvements
- Monument improvements
Every development is different and may require all or just a few of the improvements listed above to be bonded.
Cost of the bond
Subdivision bonds generally cost between 1%-3% of the bond amount. There are several factors that determine the bond cost:
- Credit of both the corporation and individuals that own the corporation applying for the bond.
- Bond form being required
- Financial positions of both the corporation and individuals owning the corporation.
- Most important……………..Financing in place to fund the improvements being done in the development.