What Makes the Surety a Crucial Part of Your Subdivision Bond?

19 August 2019
 Categories: , Blog


For anyone in the real estate industry, property subdivision can be the difference between gradual appreciation and huge profits within a short period. The process is quite straightforward. Take a large piece of land, subdivide it, and develop it so that you have more assets to sell. Their value increases as you change the property by adding amenities such as paving and water supply. Subdivision contractors can help you with all these undertakings. Subdivision bonds outline the guidelines for subdivision contractors so that they can always meet standards you require of them. More importantly, the bond also protects you because there is a surety involved. The following article discusses all the essential stuff you need to know about the surety in a subdivision bond:

Defining the Surety

When you go to a credit facility from a bank or any other financial institution, some require you to appoint a guarantor or offer collateral for the loan. This is the logic behind having a surety in a subdivision bond when subdividing and developing the property. The surety offers to bear the risk of default by your subdivision contractor. In case of failure on the part of the subdivision contractor, the surety will pay penalties due to local authorities.

Evaluating Subdivision Contractors

What makes a surety party confident about a subdivision contractor? Well, lots of work goes into affirming that the contractor is a good fit for the project you are assigning him or her. Some of the checks they perform include the following:

  1. Credit history – Subdivision contractors must have a good credit history if they are to get the services of a surety. They need to meet any historic debt obligations they have for a surety to accept bearing risks on their behalf.
  2. Ability to obtain the required machines – The subdivision contractor must show that he or she can ably provide all the necessary equipment for the project. For instance, a subdivision project involving excavation requires machines such as backhoe loaders, compactors, and graders.
  3. Financial ability to support the project – Surety parties never work with subdivision contractors who will run short of the funds while the project is ongoing. They assess the credit standing of the subdivision contractor by looking at projects undertaken in the past to determine if the contractor is capable of handling your work.


A surety party is an important element of the subdivision bond you enter with your contractor. However, the willingness of the surety means that you are working with a contractor you can trust to complete your work. The surety does all the background check so you can rest assured that you are safe.

For more information, reach out to a subdivision contractor.