Projects performed on city or county property typically require contractors to file a permit bond(s) before a construction permit will be issued. Here’s what contractors need to know about permit bonds.
Construction permit bonds are surety bonds required by a local municipality or state agency as a conditional requirement for obtaining a construction permit. These permit bonds are required to certify public safety, protect a municipality’s financial interest, and ensure building codes are adhered to by licensed contractors. These bonds also serve as security to a municipality that the city or county property will be returned to its original form once construction is complete.
There are a variety of permit bonds contractors may be required to submit with the most common being:
Encroachment Permit Bond - a permit bond required when a contractor’s work will cause them to encroach on government-owned land. This encompasses work on public roads, highways, and easement/access points.
Excavation Permit Bond - a permit bond required of a contractor when the work performed involves earth-moving actions. Earth-moving actions are operations that utilize heavy equipment to move ground.
Grading Permit Bond - a permit bond required of a contractor or property owner when performing earth work such as erosion control, drainage/stormwater runoff controls or limited, mass and contour grading.
Right of Way Permit Bond - a permit bond for construction work performed on municipally owned public right of ways. Examples of public right of ways are sidewalks, right-to-cross, access to power or phone lines, and access to public water or sewage.
When it comes to pricing, no two permit bonds are the same. While there are encroachment bonds that start at $100 flat, bonds for grading and excavation are priced by evaluating a contractor's credit, license history and the required bond amount for the work to be performed.
Most cities and counties require wet signatures on filed bond documents and therefore, permit bond forms must be mailed or dropped off to the applicable city or county permit office. Personal indemnification (an agreement between a contractor and a bonding company that the contractor will compensate the surety for any losses) is also required for all permit bonds and all bond claims must be paid back fully by the contractor/property owner to the surety company if the surety validates the claim on the bond.
Need a permit bond for work in a specific California city or county? We have information on a variety of permit bonds as well as downloadable bond form PDFs. Click the link for more: https://www.ccisbonds.com/permit-bonds/