Importance of Subdivision Bond in current Scenario

A subdivision bond is a type of contract performance bond, often referred as developer bond, which guarantees land will be developed as part of a projected subdivision assignment.  Subdivision bonds involve three key parties: the principle, the obligee, and the surety.
  1. The principle is the contractor or the owner of the business who purchases the bond.
  2. The obligee is the government agency.
  3. The surety is the underwriter of the bond
As a contractor or owner when you buy this bond, the surety agrees to pay the cost of the land improvements to the obligee, if you fail to complete the required work. The surety can then pursue compensation from the principle (you the contractor).

Notably characteristics are:
  • It is a kind of insurance purchased by a landowner when upgrades or changes are required by the government.
  • It guarantees the work is completed according to terms, within the defined timeframe.
  • It reimburses the victims of fraudulent or illegal activity.
It is often confused with site improvement bonds. The primary difference is that subdivision bonds are essential for construction of new buildings, while site improvement bonds are required when making improvements on pre-existing structures.


Subdivision bonds Florida are required by a local government authority when contractors start to work on a subdivision building project. They are a guarantee that the service provider will complete or the works such as sidewalk maintenance, electric upgrades, grading changes, etc. in the required timeline. If the contractor fails to complete the project with respective to the time, the government agency will obtain the necessary funds to get that work done.

Since these are a guarantee that contractors meet their performance obligations, the use of subdivision bonds is increasing in most of the states. For a contractor, land owner, or developer it has become necessary to learn the basics of Subdivision Bonds Florida for a quick understanding of businesses development projects.

The Cost:

Obtaining a subdivision bond is often a complicated process and requires credit checks, various financial records, project cost with outlines, and funding related information. Neilson Bonds help contractors and developers to obtain Subdivision Bonds Florida with minimal expense.

A subdivision bond costs around 3% of the bond amount, but there are several factors that will impact the price. The contract terms and size will be an important concern for the bond company. Surprisingly the contractor’s history is also measured an important factor for defining the price. The bond issuer examines the contractor’s work history, finds out the reliable credit score to trust their professional records.  We can summarize it as:
  1. The size of the job at hand and its contractual period
  2. The amount of bonding coverage required
  3. The principal contractor’s work history
  4. The principal contractor’s creditability & other financial credentials
Modern Marketplace for Subdivision Bonds:
Bond issuers throughout the surety bond industry apply a rigorous scrutiny to determine:
  1. Whether or not to approve the application
  2. A suitable rate for the given level of risk.
Currently, these bonds are being handled very differently by most of the bonding companies. Some may approve the application while some may leave it out. Therefore, it is vital customers should find an agent competent of pairing them up with the legitimate bonding company.

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