Working on a real estate development project, you may wonder whether you really need a bond manager. After all, how much help can they be?
Well, the answer might surprise you. This post looks at ten reasons you might want to hire one of these professionals and how they can assist you throughout the development process.
The first and most significant reason for using a bond manager is their bonding expertise. These professionals deeply understand the intricacies of the entire bond management process. From application submissions and issuance to tracking and, eventually, bond release, bond managers can guide you through the entire process step by step.
Generally speaking, smaller developers often aren’t aware of localized bonding processes and how to navigate them. And while larger companies have a better understanding of what they need to do, they don’t always have people on the ground in the right places at the right time. Bond managers can fill these operational gaps and ensure bond-related processes proceed smoothly.
Assistance With Bond Release
Developers also hire bond managers to assist with the bond release because they often struggle to complete the process themselves. Many developers can have as few as three people on their project team and don’t have the necessary in-house skills for bond management. Some teams turn to land development managers for assistance with the bond release, and while they may have a better grasp of jurisdictional requirements, they too often lack the understanding required to facilitate the bond release process in strict accordance with requirements. Again, bond managers can fill this skills gap.
Another reason for hiring bond managers is compliance monitoring. Developers and project owners need professionals who can ensure they follow the rules around bond management to guarantee compliance with jurisdictional regulations.
Bond managers can track:-
- Compliance with the bond’s terms
- Deadlines – dates at which you must complete various project milestones
- Reporting obligations
Ultimately, compliance monitoring helps to prevent issues that could undermine the release of the bond. Seasoned professionals keep track of the moving parts of your project, keeping your money safe.
Bond managers also assist with the timely processing of applying for bonds, including extensions and reductions. These professionals understand the application process and related procedures intimately and may have the capacity to expedite it under certain circumstances.
Bond managers complete paperwork accurately the first time, allowing project managers to go after the next project instead of worrying about closing out an existing one. This approach frees up even more time for the development team because they avoid working on close-out and can, instead, move on to the next job.
Help Dealing With Easements And Proffers
Bond managers also come in handy when dealing with easements and proffers. Many developments require the developer to provide a non-property owner, such as a utility or municipality, the use of the property for access or to install specific infrastructure. However, delays can easily occur due to improper record-keeping, making easement coordination a time-consuming process that can slow down project timelines.
Bond managers also assist with application preparation by helping you fill out all required documentation and look over them to detect errors. Bond managers can ensure you include all relevant information during the initial application submission to increase the likelihood of approval the first time. Teams can also assist when you want to draft compelling proposals or require additional documentation.
Another reason to use bond managers is their ability to reduce the risks your firm faces. In Washington DC, for instance, regulations state that you must undergo inspections on projects as they proceed. Upon project completion, you undergo another inspection, and must then wait two years for the release of your bond.
During this time, your money is at risk. If you haven’t adequately tracked and documented project elements in accordance with a jurisdiction’s requirements, they could require you to revisit and prove your work. They may even force you to redo portions of the project while also necessitating the renewal of any required permits, as they could have expired.
Again, bond managers understand this process and can develop procedures to ensure that you document all required project elements. They can also design a timeline for you to ensure timely submissions and an overall expedited process. Working in partnership reduces the risk of the jurisdiction pulling your bond and using it to finish the job while the surety pursues you for the money you owe.
Bond managers are also helpful on development projects because of their relationship network. Many of these professionals have established rapport with various stakeholders involved in the bond management process. This includes underwriters, surety companies, jurisdictional development and bond representatives, as well as punch work contractors. Bond managers can make it easier to access their services and benefit from them.
Critically, these relationships can expedite the approval process. A fully-developed network may also benefit negotiations and even improve bond tracking, providing you with more visibility.
Navigating Complex Regulations
Additionally, bond managers can help you navigate challenging or complex regulations in your area. Development projects often involve a range of local, state, and federal laws outlining how projects should proceed and the standards clients can expect.
Bond managers know how to negotiate this minefield of rules and deliver the best outcome for all stakeholders, including you. Professionals ensure approvals follow a strict timeline and you meet all compliance requirements.
Finally, hiring a bond manager can help you get a bond reduction. For instance, DFM Development Services has experience in reducing bonds from $1 million to $500,000. And our managers can do it faster because of specialization, and with less downtime than a developer’s project manager. That’s ultimately why so many real estate developers choose to use DFM’s experienced bond management team