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DRE Bond: Department of real estate bond, but also known as a HOA bond or homeowner's association bond, it guarantees for the benefit of the homeowner's association that all maintenance upkeep will be satisfied until 80% of the units are sold. Typically when a developer undertakes a project to develop a new condominium or community where subsequent monthly association dues will be assessed, the DRE bond will cover the shortfall from the existing owners payment of the association fees until 80% of the units in the development are sold, which at that point the homeowner's payment will cover the association dues in its entirety.
- When requesting a DRE bond on an account that has already been previously submitted to the surety, among the most important information that needs to be provided to the surety are the following information:
- The Bond Request form – this will provide the surety with a basic overview of the current bond being requested.
- A copy of the document as given by the department of real estate listing the name of the obligee (homeowner's association) and the penal sum of the bond.
- A copy of the bond form. The department of real estate has their own required bond forms.
- Provide information as to how many units in the development have already been sold or have received firm commitments to be purchased.
- If another surety company provided the initial underlying subdivision performance and labor and materials payment bond, provide the current surety with an explanation as to why the prior surety that provided the initial bonds are now not issuing the smaller DRE bond.
- If the DRE bond is the first bond being requested on behalf of a new developer, the following information should be provided in the submission in addition to the above mentioned items.
- Developer's Questionnaire.
- Business financial statements (balance sheet, income statement, statement of cash flows and aging schedule for accounts receivable and accounts payable) for the company's most recent year end.
- Interim Business Financial Statements.
- Personal Financial Statement for all owners of the company
- Articles of incorporation (if corporation), LLC agreement (if business is a LLC) or partnership agreement (if business is a partnership).
- Bank reference letter and last 3 months most recent business and personal bank statements.
- Copy of the trust if any of the owners of the business have their assets held in that trust.