ABOUT THE CLAIM
Recently, the Guardian & YA Surety Group was called in to consult on multi-phased 300+ lot subdivision bond claim. Subdivision bond claims represent unique challenges to the surety. In addition to their high claim costs exerting a significant impact on a surety’s bottom-line, the relet and completion work itself can be complicated by the number of jobs/contractors/specialists required to work simultaneously and be managed and coordinated. The management/oversight experience, interpersonal skills and subdivision bond claim experience of the consultant prove irreplaceable.
Work on subdivision claims typically includes the completion of off-site improvements including streets and lighting, grading, paving, gutters, curbs, sidewalks, water mains, landscaping, culverts, drainage and erosion controls, sanitation and storm sewers, etc. This particular claim was on a bond of about $6MM, and was located in the West. The developer had barely completed the first of three phases and declared bankruptcy with much of his infrastructure responsibilities left incomplete.
ABOUT THE INVESTIGATION
The Surety Group’s construction and engineering experts performed an on-site inspection, one that included supporting, engineer-flown drone footage, and revealed residences constructed on only the first of three phases. Incomplete work included underground utilities, curbs and gutters, finish grading, top asphalt, all streetlights, and complete landscaping and subdivision signage. On subdivision bond claims, especially, one must distinguish between bonded and un-bonded scope of work, and it also helps to pay close attention to the timing of the developer’s work and the obligee’s acceptances of such. On this claim, which is commonly the case, the penal sum of the bond was less than what was required to complete the entire bonded scope of work.
ABOUT THE RESOLUTION
Success in minimizing losses and reducing exposures on subdivision claims includes both construction management mastery and the surety consultant’s overall business sophistication and ability to creatively problem-solve, listening closely and working with the obligee to arrive at practical solutions that meet with real-world city and resident needs.
On this claim, the surety team was able to get everyone to agree to a reduced amount of work that actually required completion to support the currently constructed residences. The team then prepared numerous RFPs and collaborated with the city’s engineer in the selection of contractors who were qualified to submit competitive bids. Upon the selection of the completion contractor, the surety team worked closely with the chosen contractor all the way through the agreed-upon scope and acceptance by the obligee. In this case, the surety’s losses on the bond were limited to about 60% of the bond’s penal sum. The obligee was happy to have improved and enhanced Phase One rather than partially improved Phases Two and Three, which would likely not be developed for an extended period of time and therefore represent maintenance issues for the obligee. The surety’s counsel was grateful for the expert support it was provided, assistance that was pivotal in achieving an agreement and release of the surety bond.
ABOUT GUARDIAN & YA GROUP
From smaller, everyday surety claims and on up to costly, complicated subdivision bond claims and performance bond claims on public and private projects of every size and type, the Guardian/YA Group is the one surety team you can count on every time. This A-list of professionals possesses both the proven claim investigation and administration savvy along with the construction and engineering expertise to help you resolve claims expediently and efficiently. When surety claims come in, you need to know exactly what happened, why, and, most importantly, what it’s going to take to fix it, all while minimizing your losses and exposures. One call to YA and you know you’ve got your surety claims under control. Kindly get in touch today.