A subdivision bond — also called a subdivision improvement bond or site improvement bond — guarantees that a developer will complete the public improvements required as a condition of a subdivision map: streets, curbs, gutters, sidewalks, storm drains, sewer and water lines, and similar work that will be dedicated to the public.
Why Cities and Counties Require Them
Under California’s Subdivision Map Act, a city or county can approve a final map before the required improvements are finished if the developer signs an improvement agreement and posts security. The bond protects the public: if the developer doesn’t finish, the agency can use the bond to complete the work.
Types of Security and Required Amounts
Government Code § 66499.3 sets the ranges. The city or county picks the exact amount within them:
- Faithful performance: not less than 50% and up to 100% of the estimated cost of the improvements.
- Labor and materials: not less than 50% and up to 100% of the estimated cost, protecting contractors, subcontractors, laborers, and suppliers who work on the improvements.
- Warranty: security against defective work for one year, in an amount the legislative body sets.
The estimated cost usually comes from the engineer’s estimate approved by the agency, so the bond amount depends on the size of the project.
Common Improvement Bonds
- Street and road improvements
- Grading and drainage
- Sewer, water, and storm drain
- Landscaping and other conditions of approval
Performance vs. Labor & Materials
Most agencies require both: one bond guaranteeing the improvements get built, and a second guaranteeing the people who build them get paid. See our performance bond and payment bond pages for how these work on contracts.
How Developers Qualify
Subdivision bonds can be large and stay open until the agency accepts the improvements, so underwriting focuses on the developer’s financial statements, development experience, and the project’s funding. Having the improvement agreement, engineer’s estimate, and financials ready speeds up approval.
How Much Does It Cost?
The premium depends on the bond amount and on the developer’s financial strength and experience. We submit your application to several surety companies, and each sets its own rate, so the premium isn’t set until a surety approves you.
How to Get a Subdivision Bond
- Send us the improvement agreement and the agency’s bond amounts and forms.
- Provide financial information for the developer.
- We submit to surety companies and get you approved.
- Your bonds are issued on the agency’s required forms.