Subdivision bonds are different from the more common performance bonds used for construction projects. With subdivision bonds, the owner of the project provides bonds to the public agency to guarantee the installation of improvements that will ultimately be dedicated to the public but paid for by the owner/developer.
The application iis abbreviated but the financial requirements are the same as for performance and payment bonds.
You will need to fill out the following forms:
1. The subdivision questionnaire form is a two-page application that asks questions similar to those in the Contractors Questionnaire but is not as extensive. Please complete the form and fax it to us. We will need the original signed form when approval is received. The forms must be filled out legibly and completely. This is like a loan.
2. The Work in progress / Status of contracts Form need’s to be filled out and totaled. This form gives the surety company information such as how well your company is doing with its present jobs, the size of the jobs, whether there are problems with a particular account, whether you are ready for additional work, the accuracy of your estimates for costs and profit; and how well the owners-obligee’s are paying your company.
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3. The surety company will require a business financial statement prepared by your CPA. The financial statement is a reviewed statement to be prepared with the “cost-to-complete” method. This method is the one that is used throughout the construction industry. The mercantile statement does not take into consideration special circumstances that apply to the construction field, so make sure that your CPA will do the “cost-to-complete” method prior to paying for the financial statement. Many companies already have a financial statement prepared by their CPA. Please note that this will be an annual requirement.
4. Many people now have an in-house personal financial statement prepared and are able to produce it whenever it is needed. If you do not have a personal financial statement, you may use the Personal financial statement form we provide. Please print the form and fax or mail the completed form with the rest of your documents to us. If you have additional assets such as real estate, either wholly owned or partially owned, surety will require the following information in a spreed sheet format.
- Name of owners or project
- Address of the property
- What type of property it is Like SFR
- Age of the structure
- Purchace price
- Outstanding loan amounts
- Income from the property
- Your percentage ownership
- Value of the property now
If you own other substantial assets, you may wish to supply that information to show financial strength. Click here for more info
5. Surety will require the following information:
- A copy of the project contract showing the scope of work, time frame penalties and a general outline of the project (not the detailed plan, but the binding part of the contract). (It does not have to be the actual signed document as it may take some time to get the executed documents.)
- A bond form is usually included with the obligee’s package of requirements for the surety to use to execute the bond. We will need a clear copy of the form to submit to the surety for their approval;
- If this is a bid, we will need the bid bond form from the obligee’s package of requirements. If they have not included the forms, please indicate that with your submission;
- The most recent business federal tax returns;
- The most recent personal federal tax returns;
- If you have a line of credit at a banking institution, the surety will require information regarding the parameters of the line of credit, including amount used, high limit, and terms;
- Copies of your most recent bank statements for personal and company checking and savings accounts to verify cash on hand.
- The face sheets of your liability and workers compensation insurance policies.
6. Subdivision bonds will require a copy of the city, county, or state engineers’ estimate to complete the project.
Additional questions may be asked and they may also request a business plan or other items. In some instances, they may ask that you fill out paperwork for the SBA (Small Business Administration), but this is not routine.
If you have any questions please give us a call or send us an email.
Toll Free: (800) 622-6637 - ask for Bob or Patricia Hawkins
Toll Free: (800) 322-5545 - ask for Bob or Patricia Hawkins
Tel: (619) 670-1136 - ask for Bob or Patricia Hawkins
Fax: (619) 670-5026
Email: bondpro1@cox.net
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