Road and Sewer Bonds

A Road Bond is a guarantee. Also known as a Section 38, this is an agreement that is put in place between the Developer and the Council or relative Authority to ensure the completion and adoption of a new road system on a development. The agreement is voluntary and between a developer and the Council. The developer agrees to Bond or place cash collateral to the value of the Road Works and covers that roadway until the end of the Making Good of Defects period and issue of the final certificate by the Council at the point of adoption. The Bond risk ceases at this point. The value is usually sufficient to ensure the Council can construct/repair the road if the developer fails to do so.

How do Section 38 Agreements work?
The Council produces a draft Agreement for the developer to include the developers proposals. The developer and their surety for the bond sign the Agreement. The Agreement is then completed by the Council.The agreements are in place to cover developer/contractor failure either by sub-standard works or liquidation of the contracting company prior to completion of the works or adopting the road.

What is a Section 104 Agreement?
A Sewer Bond can also be a requirement by a local authority. Also known as a Section 104 agreement between the owners of a private sewer (usually a developer) and the relevant water authority whereby, subject to the owner constructing the sewer to an agreed standard and maintaining it for an agreed period the water authority will adopt it and it will thereafter become part of the public sewer system.