Subdivision bonds are required of property owners when subdividing residential or commercial properties into smaller parcels or lots. The bond guarantees to the public entity with jurisdiction over the property - usually a local municipality - that the improvements needed to service the lots being created will be funded and installed by the property owner at no expense to the municipality. These improvements typically include streets, sidewalks, curbs, gutters, sewers, water mains, monuments and landscaping. Ownership of the completed improvements is typically transferred to the local municipality upon completion.
Subdivision bonds are also known as the following:
- Subdivision bonds
- Performance bonds
- Site improvement bonds
- Completion bonds
- Plat bonds
Developers start the subdivision process by filing a map (sometimes referred to as plat) with the public agency responsible for overseeing land use where the project is located. These maps detail the proposed configuration of the project, including any public improvements necessary to serve the project.