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Plat & Site Improvement Surety

Here's How Much Subdivision Bonds Should Cost in Your Area

Stop using Letters of Credit. Use a Subdivision Bond to guarantee public improvements (streets, sewers, lights) and keep your liquidity for the build.

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Free up your bank borrowing capacity.

Architectural Blueprints and Hard Hat
Plat Map
Approved
Step 1 of 4

What are you developing?

The type of infrastructure determines the bond terms.

Residential Subdivision Single-family homes. Bonding streets, curbs, and gutters.
Commercial / Mixed Use Shopping centers or office parks requiring public utilities.
Replace Letter of Credit I want to release my cash collateral back to the bank.
Subdivision Agreements

We review the specific "Subdivision Improvement Agreement" (SIA) from your municipality to ensure the bond form matches their exact legal requirements.

Why is this required to record the Plat?

Cities want to ensure that if a developer goes bankrupt after selling lots, the taxpayers aren't stuck paying for the roads and sewers.

  • Public Improvements: Guarantees the installation of "Off-Site" items (Paving, Water, Sewer, Lights).
  • Maintenance Bond: Often includes a 1-year warranty period after the city accepts the improvements.
Step 2 of 4

Developer Financial Strength

Subdivision bonds are large. We look at liquidity, not just credit score.

High Liquidity

Strong cash position and low debt. Lowest rates available (1-1.5%).

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Standard

Average debt-to-equity ratio. Standard market rates apply.

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LLC / New Entity

New LLCs will require the personal indemnity of the owners.

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Required Documents for Approval

Unlike small license bonds, Subdivision Bonds require underwriting. Be prepared to provide:

Company Financials: Last 2 years P&L and Balance Sheet.
Engineer's Estimate: Breakdown of the cost of improvements.
Step 3 of 4

Total Cost of Improvements?

Use the City Engineer's estimate, not your bid price.

Under
$150k Small Tract
$150k -
$1M Standard
$1M + Master Plan

Note: Most cities require the bond to be 110% to 125% of the engineer's estimate to account for inflation and contingencies.

Step 4 of 4

Need other developer coverages?

Protect the project from liability and physical damage.

Excess Liability Higher limits for large scale development projects.
Builders Risk Protects materials and structures during the build phase.
Commercial Auto Fleet coverage for project managers and sales staff.

Surety Bond vs. Letter of Credit (ILOC)

Many banks require you to post an Irrevocable Letter of Credit to cover public improvements. This reduces your borrowing power dollar-for-dollar.

The Bond Advantage:

  • Liquidity: Bonds do not lock up your cash or credit line.
  • Leverage: Use your bank capital for vertical construction, not sitting in an account.
  • Duration: Bonds are easier to extend if the project faces delays.
Subdivision Bond
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How much does a Subdivision Bond cost?

Pricing is based on the developer's financial strength and experience.

Top Tier Developer

1.5% - 2%

Per Year

Strong Financials
For developers with high liquidity and a track record of completed subdivisions.

Most Common
Standard Rate

2.5% - 3%

Per Year

Standard Market
Typical rate for single-asset LLCs or projects with higher leverage.

Collateralized

1% - 1.5%

With Collateral

Secured Option
If financials are weak, we can issue the bond if you provide cash collateral (cheaper than ILOC fees).

Frequently Asked Questions

When is the bond released?
It is a two-step process. First, the city engineer inspects and "Accepts" the improvements, reducing the bond (usually by 90%). Second, after a 1-year "Maintenance Period" (warranty), the remaining bond is released.
Can I reduce the bond amount as I finish work?
Yes. This is called a "Bond Reduction." As you pave streets or install sewers, the city can certify the work is done, and we can reduce the bond penalty (and your renewal premium) accordingly.
What if I sell the lots to builders?
The bond stays with the land developer (you) until the public improvements are finished. Selling the lots does not automatically release your obligation to the city to finish the streets.
Do I need a bond for a private gated community?
Sometimes. Even if the streets are private, the county may still require a bond for the connection points to public roads, water mains, and sewage systems to ensure they don't damage public infrastructure.