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What is a Subdivision Surety Bond, Completion Surety Bond, Plat Improvement Surety Bond, or Site Improvement Surety Bond?

Subdivision, completion, plat, site improvement, and performance bonds are all names for bonds that owners/developers are often asked to provide to municipalities as a condition to build a subdivision or for the installation of other public improvements.

What is their purpose?

These bonds are performance guarantees which ensure the installation of the agreed upon public improvements (curbs, streets, sidewalks, etc.) by the owner/developer.  Should the owner/developer fail to complete the agreed upon public improvements, the penal sum of the bond is then available to the municipality so the improvements can be completed or the property restored to its previous state.  Otherwise, the bond becomes null and void after the public improvements have been completed barring any additional warranties indicated in a specific bond form.

How are they underwritten?

A US Treasury listed surety company will review the developer’s experience and success in their development career, key people associated with the development, and overall financial condition.  The specific project details such as size and scope will also be a key factor in determining the total capacity for any one bond or concurrent series of bonds.

How much will it cost?

Pricing is typically determined by the overall experience and financial condition of the developer.  Rates are typically less than the cost of obtaining an irrevocable letter of credit which makes the surety bonds an attractive option compared to other methods allowed by the municipality.  Also included in the price of the surety bonds is a one (1) year maintenance bond which ensures proper upkeep of the developer-installed public improvements.

What are the alternatives to a surety bond?

The three main alternatives to a surety bond are irrevocable letters of credit, tripartite agreements, CD’s or similar forms of securities.  However, these alternatives often come at a greater cost to the developer in terms of delays, cost of capital, and other issues in the case of default.

How do I apply for a Subdivision Surety Bond?

  1. Start by filling out our Subdivision Surety Bond Application by clicking here;
  2. Attach a blank copy of the needed bond form;
  3. Attach a copy of the most recent corporate financials;
  4. Provide the engineer’s estimate for the subdivision improvements; and
  5. Email or fax the information to or 888.204.8716.

Please note that additional underwriting information may be needed depending on bond request, information submitted, and to obtain the lowest possible rate.