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What Is A Subdivision Bond?
A subdivision bond is a type of performance bond that guarantees land will be developed as part of a proposed subdivision project. Typically a developer begins by submitting a map filing (or plats as they can be called) with the local government agency responsible for overseeing the project that details the proposed development including infrastructure such as sidewalks, public street lights etc. The bond ensures the infrastructure is developed should the principle default on the terms of the project.
Also commonly referred to as a plat bond, site improvement bond, performance bond or developer bond, a subdivision bond is a three party relationship between the principle (the contractor or owner of the the project whom must provide the bond) the obligee (the entity requiring the bond) and the surety (the insurer that underwrites the bond). Also, these bonds are indemnified meaning the principle is required to repay the surety should they fail to meet the obligations set forth in the contract, causing the surety to pay out on the bond.
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