A subdivision contract bond is a surety bond that landowners, developers or builders must purchase when upgrades or changes are required from the local government agency. The subdivision bond guarantees that workers perform their responsibilities according to the terms mentioned in the bond.
The bond is mostly required by township or municipalities. The subdivision bond guarantees that a developer will put in agreed-upon improvements like water or sewer lines, street lights, and sidewalks. If a developer files for bankruptcy, the surety will fulfill the obligation by either reimbursing the township or municipality or by hiring another business to finish the job satisfactorily.
Subdivision bonds are also known as the following:
- Subdivision bonds
- Performance bonds
- Completion bonds
- Plat bonds