Three requirements, one builder
| Requirement | Who asks | Page |
|---|---|---|
| Municipal site works security | The municipality, under a subdivision or site plan agreement | Developer bonds |
| Warranty security | Tarion, under the Builder Agreement | Tarion bonds |
| Condo deposit security | The Condominium Act, for deposits above Tarion protection | Excess deposit bonds |
Why builders move security to surety
- A letter of credit usually draws down the builder's bank facility. Surety is a separate line, so the bank credit stays free for land and construction.
- Since November 20, 2024, Ontario municipalities must accept a compliant pay-on-demand surety bond for land-use planning security (O. Reg. 461/24).
- Tarion's Builder Agreement lists surety bonds among the forms of security Tarion can request.
- Condo declarants can release excess deposits from trust once prescribed security is in place.
What underwriters look at
- Financial statements for the builder and any holding or affiliated companies.
- Equity in the project and the lender's commitment.
- Track record: homes delivered, warranty history, Tarion standing.
- The security amount and how it reduces as works are accepted.
- Indemnity from the company and its owners.
One surety relationship for the whole project
The same builder often needs all three, plus contract bonds for the trades and course of construction cover for the build. One underwriter who sees the whole program can set limits that fit the project, not three separate files.
