What the municipality secures
Security follows the agreement. Under the Planning Act, subdivision conditions can cover municipal and other services (s.51(25)), and site plan agreements can cover items like:
- Road widenings, access ramps and curbs.
- Parking, loading areas and driveway surfacing.
- Walkways, lighting, walls, fences and plantings.
- Grading and the disposal of storm, surface and waste water.
- Easements for sewers, drainage and utilities.
The amount and how it reduces come from the municipality's agreement, not the regulation.
O. Reg. 461/24: the pay-on-demand rule
Since November 20, 2024, an owner or applicant may choose a surety bond to secure these obligations, and the municipality must accept a bond that meets the regulation. Nobody is forced to use one. A compliant bond must:
- Come from an insurer licensed under the Insurance Act to write surety, rated at least A- (S&P, Fitch or A.M. Best), A3 (Moody's) or A (DBRS).
- Guarantee payment to the municipality if the principal defaults, with the municipality deciding default in its sole discretion.
- Pay on written demand within 15 business days, even if the principal objects.
- Give at least 90 days' notice before termination, with replacement security accepted at least 30 days before the termination date.
- State that the amount can be reduced and the conditions for reduction.
Surety bond or letter of credit
| Letter of credit | Surety bond | |
|---|---|---|
| Who issues it | The builder's bank | A licensed surety |
| Effect on bank credit | Usually reduces the facility | Separate line; bank credit stays free |
| Called how | On demand | On demand, under O. Reg. 461/24 |
| Underwriting | Bank credit review, often collateral | Surety review of financials, track record and indemnity |
Every bond is subject to underwriting. Terms, collateral and premium come from the file.
Reductions and release
As the municipality accepts works, the agreement usually lets the security reduce. Ask for a reduction in writing and send the municipality's acceptance to the surety so the bond can be amended or released.
