Road and sewer bonds are a very specialist area of the surety market and provide a financial guarantee from an independent third party (underwriter) to the Adopting Party (Local Authority or Water Company) in respect of a Developers obligations to achieve adoption of a sites highway or sewers.
If a Developer fails to fulfil their obligations as detailed within the adoption agreement [S38, S278, S220, S98 S104, S185], the Adopting Party are able to call upon a bond to secure the monies necessary to fund the completion or rectification of required works to bring the highways or sewers to an adoptable standard.
Once adoption of a site’s infrastructure has been achieved, the road or sewer is then transferred to the Local Authority or Water Company which is then maintained at the publics expense.
Adoption agreements are legally binding contracts obliging the Developer to satisfy any adopting party stipulations to achieve adoption and ordinarily take form in a tri-party agreement: