Right Of Way Encroachment And Road Bonds

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What you need to know about Right Of Way Encroachment And Road Bonds

Popular Right Of Way Encroachment And Road Bonds

What is a right of way bond?

Right of way bonds (also known as ROW bonds) are legally binding agreements between three parties: contractors working on a public right-of-way, the government agency responsible for regulating local roadways, and a surety company.

The government agency is the Obligee and establishes the obligations that the contractor (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the contractor.

Why do you need a right of way bond?

Right of way bonds are required in some states for eligibility to obtain a permit to perform work on or involving a public right of way. Different forms of right-of-ways include sidewalks, right-of-entry, and access to power lines, water, and sewage. Some states where you need a surety bond include California, Colorado, New York, and Texas. Most states handle right of way licensing directly while some allow local municipalities to handle licensing and regulations.

When the surety company issues the bond, they provide the government agency a guarantee that they will receive payment for any financial losses resulting from a violation of the statutes and regulations set forth by the right of way permit.

If the contractor fails to meet the obligations set out by the government agency, the surety will pay out any damages up to the bond amount. The contractor is ultimately liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.

How much does a right of way bond cost?

Right of way surety bond costs vary depending on the total bond amount and the premium rate. The government agency sets the required bond amount and the surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium.

Premium rates for right of way bonds typically cost between 1% and 5% of the total bond amount. Most right of way bonds require credit checks. During the application process, the surety company will evaluate your financial strength and industry experience. For bonds requiring credit checks, applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing a right of way bond. EZ Surety still offers competitive rates to individuals with low credit scores or other financial issues.

Below are the lowest premiums EZ Surety has issued for right of way surety bonds in popular states.

  • EZ Surety has issued right of way bonds in the State of California for premiums as low as $250
  • EZ Surety has issued right of way bonds in the State of New York for premiums as low as $100
  • EZ Surety has issued right of way bonds in the State of Texas for premiums as low as $100