FIA Surety is a strong niche player that specializes in Site and Subdivision Bonds – but you may not be. In fact, if “surety” is a small slice of “bonding”, Subdivision is an even smaller part (a subdivision?) of surety bonds. Cool bonding joke?
Let’s take some of the mystery out of this subject:
Q. Who may require one of these bonds? A. Any commercial property owner who modifies or adds to their building or property, strip mall developers, home builders, land developers.
Q. Are these the same as a Performance Bond? A. They do guarantee that construction will be completed, but on these bonds, the principal (bond applicant) is paying for the work. Other differences: There is no construction contract with the obligee, and no required completion date.
Q. What is the underwriting approach?
A questionnaire and financial statements are required
There may also be mandatory bond forms from the obligee
The planning board approval for the project is reviewed
We also need the municipal engineer’s list of “public improvements” that will be covered by the bond
Since the work is self-financed, we need evidence of how the client will fund the work
Also need to know who will actually perform the construction
That’s pretty much “it!” Sounds easy, right? Why do most underwriters avoid these bonds? We don’t! We have written them energetically for more than 40 years!