Permit and Right of Way Bonds

Why Are Right of Way Permits Required?

Right of way construction projects are unique in that they will perform some or all of the work on public owned property or even some private property owner's property.

Because part or all of the construction project impedes in this land in most cases a right of way permit is required for the project.

This permit does a couple things:

• It ensures the contractor will have the necessary safety control like detours and coverings setup
• It ensures the contractor will restore the property to the same condition and specifications as prior to the work
• It also shifts the legal responsibility for any injury or property damage from the property owner to the contractor

In many cases when working on a project that requires a right of way permit, you'll be required to purchase a right of way surety bond as well.

How Much Does a Right of Way Surety Bond Cost?

Most right of way bonds have a small amount ranging from $5,000 to maybe $20,000.

This amount is the available coverage (or penalty) available if a claim ever has to be made against the bond.

The amount is going to be set by:

• The state, county, or city government if it's a public works project
• The project owner if it's a private project

This amount will affect the price you pay.

How To Save Hundreds of Dollars Purchasing Your Right of Way Bond

We are Surety Bonds Direct, a specialized surety agency. We work with a large network of A-rated sureties. This allows us to price shop and find our customers the lowest possible price for the bond they need.

A surety is just an insurance company that chooses to underwrite right of way surety bonds.

For most right or way surety bonds, as long as they are under $25,000 we have already secured a low fixed price with no personal credit check required.

Prices for these bonds start at $100.

If your bond amount is over $25,000, in most cases, the personal credit of the construction company's owner or owners will be a determining factor in the price.

The reason credit is used is because it's the only measure of trust the surety has to determine if you'll fulfill all the requirements of the project.

The surety will use the personal credit of the owners along with these factors to determine a rate.

• Project history
• Bonding history

This rate multiplied by the bond amount is the price you pay.

For example, we recently worked with a contractor who needed a $100,000 right way bond for a highway project.

We were able to secure them a low rate of only 1%. So they had to pay $1,000 to have their bond issued.

Here's example pricing using this $100,000 as an example. The rates in the table are from really good to about average.

TABLE

If you have a history of successfully completed projects and their financials, share them with your bond specialist. We have been able to get lower rates because of this.

How Long To Right of Way Bonds Last

When you purchase your right of way bond, the term is effectively 12 months.

But you only need an active right of way surety bond for as long as the project lasts.

When your project is done, you can provide proof, typically in the form of a release from the project owner that the project is complete.

Once the project is complete the surety will cancel your bond obligation.

Some projects can be multi-year projects and in this case you will have to renew your bond for an additional 12 month period.

This is another reason why working with us is so valuable for your business, we manage your bonds for you.

So unless we hear from you, we'll contact you 30 to 40 days in advance of your bond's expiration to see if you have to renew it.

Renewing only requires you paying the renewal cost or premium for your bond.

What About Other Constructions Surety Bonds?

A right of way permit bond is typically only one of a few required surety bonds for a specific construction project.

Many of these projects are likely to include the following bonds:

• Bid bonds
• Performance or contract bonds
• Payment bonds

These bonds are your typical construction surety bond stack.

Make sure you read the details of how bid bonds work, but at a high level this is a surety bond to ensure you don't submit an unrealistically low bid to win a project.

The performance or contract bond ensures that you complete the project on time and according to the contract you signed with the project owner.

A payment surety bond is used to ensure all supplies, subcontractors, and any other project expenses are paid for.

There can even be more bond requirements depending on the project and its scope.

We can help you with all of these bond requirements and manage them for you.

The best first step to take is to complete our bond request form. You can only select one bond so if you need a bid and right of way, choose "bid bond" and then tell us about your project.

A bond specialist will call you and help you get all the materials we need to make this process fast and ensure you pay as little as possible.