Charlotte Land Development Services Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Charlotte Land Development Services bond
At a Glance:
- Average Cost: Between 0.75% to 12.5% of the bond amount per year based on the applicant’s credit history
- Bond Amount: Determined on a case by case basis (more on this later)
- Who Needs it: Developers seeking to sell subdivision plats before completing public infrastructure improvements
- Purpose: To ensure the city will receive compensation for financial harm if the developer fails to construct all required streets, sidewalks, storm drains, etc.
- Who Requires the Bond: The City of Charlotte
Background
Charlotte Municipal Code 20-58 requires all developers seeking to sell subdivision plats before completing public improvements to purchase and maintain a surety bond. The Charlotte City Council enacted the bond requirement to ensure that developers install all streets, sidewalks, storm drains, etc. The bond provides benefits to the city, land buyers, and the developer. The city and land buyer are assured that public improvements will be completed, and the developer is able to offer subdivisions for sale before construction is completed.
Developers may purchase either a separate bond for each subdivision plat or one blanket bond covering all subdivision plats in the same project.
What is the Purpose of the Charlotte Land Development Services Bond?
The Charlotte Land Development Services bond ensures that the city will receive compensation for financial harm if the developer fails to abide by the regulations outlined in Charlotte Municipal Code 20-58. Specifically, the bond provides the city with financial recourse if the developer never completes public improvements after selling a subdivision plat. In short, the bond is a type of insurance that protects the city if the developer violates the bond’s provisions.
How Can an Insurance Agent Obtain a Charlotte Land Development Services Surety Bond?
BondExchange makes obtaining a Charlotte Land Development Services bond easy. Simply log in to your account and use our keyword search to find the “land” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
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How is the Bond Amount Determined?
Charlotte Municipal Code 20-58 dictates that the bond amount must be 125% of the estimated cost of constructing the public improvements. The City Planning Department will provide the developer with their required bond amount after receiving a completed Surety Development Preferences Selection Form which must be submitted along with the developer’s subdivision plan.
Is a Credit Check Required for the Charlotte Land Development Services Bond?
Surety companies will run a credit check on the owners of the development company to determine eligibility and pricing for the Charlotte Land Development Services bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the Charlotte Land Development Services Bond Cost?
The Charlotte Land Development Services bond can cost anywhere between 0.75% to 12.5% of the bond amount per year. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the bond cost on a $10,000 bond requirement.
$10,000 Land Development Services Bond Cost
| Credit Score | Bond Cost (1 year) |
|---|---|
| 720+ | $100 |
| 680 – 719 | $150 |
| 650 – 679 | $200 |
| 600 – 649 | $400 |
| 550 – 599 | $750 |
| 500 – 549 | $1,250 |
Who is Required to Purchase the Bond?
Charlotte requires developers that have not installed all required public improvements to purchase a surety bond before being approved to sell subdivision plats.
The term “public improvements” includes all streets, sidewalks, gutters, storm drains, and other public infrastructure that the city will assume maintenance responsibilities over.
To paraphrase Charlotte Municipal Code 20-6, a subdivision is a piece of land that has been divided into smaller parcels, referred to as “plats”, that are sold individually.
How Do Charlotte Developers Obtain Approval for Their Subdivision Plans?
Charlotte requires developers seeking to subdivide their land to obtain approval before being issued building permits. The general process for obtaining subdivision plan approval is as follows:
Step 1 – Submit the Plan and Surety Preferences
Developers are required to submit a preliminary subdivision plan to the Development Center via email or in person at the following address:
City of Charlotte
Attn: CLT Development Center – Bond Administration,
Lobby Level, 600 E. 4th Street
Charlotte, NC 2820
The department recommends that applicants first submit an informal sketch plan before submitting their preliminary plans. Developers may begin constructing streets and storm drainages if their preliminary plan is approved.
Developers that wish to sell plats before completing public improvements should submit a completed Surety Development Preferences Selection Form with their plan. They must choose between one of the following estimate surety options:
-
- Will not include credit for complete work
- Includes credit for complete work and is calculated upon plat approval
- Estimate will include credit for complete work, however, the calculation will be deferred until requested by the applicant
After reviewing the developer’s surety preferences form, the department will provide the developer with the required bond amount that must be obtained before any plat can be sold.
Step 2 – Submit a Record Map
After their preliminary plan is approved, developers must submit to the department (see Step 1 for submission methods) a record map showing all lot dimensions, street and sewer right-of-way locations, public storm drainage easements, and exact information used in all deed and title work. If the map is approved, then the developer must take the map to the Registrar of Deeds Office to be recorded.
What are the Insurance Requirements for Charlotte Subdivision Plans?
Charlotte does not require developers to obtain any form of liability insurance as a prerequisite to having their subdivision plans approved. However, developers will most likely need insurance to obtain their building permits. Developers must purchase and maintain a surety bond with a limit that is set by the Planning Department and equal to 125% of the estimated cost of constructing the public improvements.
How Do Charlotte Developers File Their Land Development Services Bonds?
Developers should mail or deliver their completed bond forms, including the power of attorney, to the Development Center at the following address:
City of Charlotte
Attn: CLT Development Center – Bond Administration,
Lobby Level, 600 E. 4th Street
Charlotte, NC 2820
The surety bond requires signatures from both the surety company that issues the bond and from the applicant. The surety company should include the following information on the bond form:
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name and address
- Bond amount
- Subdivision lot numbers
Developers must pay a fee when filing their bonds.
What Can Charlotte Developers Do to Avoid Claims Against Their Land Development Services Bonds?
To avoid claims on their Land Development Services bonds, developers in Charlotte must ensure that they install all required public improvements.
What Other Insurance Products Can Agents Offer Developers in Charlotte?
Most reputable Charlotte developers, and their hired contractors, will purchase liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Charlotte Developer Customers?
Charlotte conveniently provides the public with the means of searching for all active permits and projects in the city. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.