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Site Improvement Surety Bond
What is a Site Improvement Bond?
A Site Improvement Bond is a surety bond that guarantees renovations or improvements done to an existing structure, or site, are completed according to a contract’s specifications. Developers and contractors often must post a site improvement bond before they are issued a permit to begin construction on a public project or a project that involves improvements to public property. Site improvement bonds are often used to guarantee the completion of improvements to sidewalks, streets, curbs, gutters, storm drains, utilities, landscaping, and grading.
A Site Improvement Surety Bond is a type of contract bond that is also sometimes referred to as a construction bond, a performance bond, and a subdivision bond. Site improvement bonds and subdivision bonds are very similar. They are both used to protect public funds and publicly owned property. Project owners provide these bonds to public agencies at the project owner's’ expense. The project owners are also required to pay for the improvements to public property, which when finished, become property of the public agency and the community at large. The key difference between the two surety bonds is that site improvement bonds guarantee upgrades to existing structures where a subdivision bond guarantees improvements concerning new structures.
Site Improvement Surety Bonds are individually underwritten so the cost can vary and depends on the size and scope of the project as well as the developer’s size, experience, and financial position. Typically, well-qualified applicants are charged as low as 1-3% of the bond amount.
Due to the associated risk from the perspective of the bonding company, Site Improvement Bonds can be very carefully underwritten. Part of the cost of this bond will be the time and effort needed to provide the documentation and information the bonding company will need. Some of this information will include corporate financials, personal financials, credit reports, industry experience, project details, and sources of funding. The larger the project, the more details and information that will be required. Here is a comprehensive list of items needed to establish a full surety relationship.
Site Improvement Surety Bonds are oftentimes required by local law or ordinance. The bond must be posted before a contractor can begin work on a project involving public property. The bond guarantees the contractor will finance the improvements to public property and utilities associated with the development of an existing site or structure. The bond protects the public from losing any money in the case of the developer defaulting during the project or the developer not performing according to the approved permits and local construction/building code.
Local municipalities and governments require developers and landowners to post the site improvement surety bonds when they obtain building permits or file a lot map. The Obligee on the bond is the municipality (city, county, township, etc.) requiring the bond. You, the developer/project owner, are the Principal on the bond. Unlike other bond types, site improvement bonds and their associated projects are financed by the Principal. When the project is completed, the ownership of the improvements is transferred to the Obligee.
Contact The ProSure Group! As surety bond experts in business since 1993, The ProSure Group has issued hundreds of Site Improvement Bonds and has partnerships with more than 30 different surety companies. This ensures that we get you the best, most competitive pricing and terms available in the marketplace. You just need to complete our simple application and one of our specialists will quickly contact you.