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Encroachment Bond- An encroachment bond is a bond that is required by a local municipality(city or county) when a contractor performs work on private property that might spread onto public property. Bond guarantees that as a result of the principal's work on private property, principal will not materially alter the condition of the adjacent public property.
- When requesting an encroachment 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 bond requirement document. This document provided by the city/county to the contractor stating that an encroachment bond needs to be in place andwill also dictate the amount of the bond. Typically, the bond will be $100,000 or less.
- Copy of the engineer's estimate. The engineer's estimate shows how the municipality came up with the requested bond amount. It is usually determine by the municipality's estimation as to what it would cost to do the work should the principal abondon the project in it's entirety.
- The obligee will usually have their own encroachment bond form.
- Because the penal sum of a shoring bond is usually $100,000 or less, most sureties will require just the following additional information:
- Business financial statement if the principal is a corporation
- Personal financial statement for all the owners of the corporation.
- Current bank statements for both the corporation and the owner(s) of the corporation.