Performance Guarantees
by R. Jeffrey Lyman
Attorney R.J. Lyman reviews the basics of performance guarantees, including surety bonds, letters of credit, and escrows.
From PCJ #19, Summer 1995
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A fundamental purpose of subdivision controls is to ensure that
adequate infrastructure improvements will be provided to service
anticipated development. This requires substantial cooperation
between the developer and the planning commission in providing
for the eventual construction of roadways, water and sewer
systems and other public improvements within or near a
subdivision. [Note: For an overview of subdivision
regulations, see Martin Leitner & Elizabeth Garvin's "An
Introduction to Subdivision Regulations," in Issue #5 of the
PCJ].
The principal mechanism for protecting public and private
interests in this process is the performance guarantee. This
article explores why performance guarantees are necessary, what
forms they typically assume, and how they operate.
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