1. Section 38 Agreement Bond (Highways Act 1980) - Adoption of a New Highway
Section 38 agreements are entered into by developers to enable the status and responsibility of a new road(s) to be transferred from them to the local authority, providing they have been constructed to the required specification and standards.
A Section 38 Agreement bond enables the local authority to access funds to satisfy the developer’s outstanding obligations, should they default on the particulars of the agreement.
2. Section 278 Agreement Bond (Highways Act 1980) - Alteration to a Public Highway
As part of obtaining planning permission, a developer may be required to enter into a Section 278 Agreement, which obliges them to undertake modifications or improvements to the existing highway to account for the impact of the new development. The nature of the types of works a developer is required to undertake as part of an S278 Agreement include:
- Construction of new junctions, with and without traffic lights
- Construction of roundabouts
- Construction of cycle lanes or improved footpath network
- Construction of traffic-calming measures (speeds humps, road narrowing, etc)
- General improvements works (street lighting, resurfacing works, etc)
A Section 278 Agreement bond enables the local authority to access funds to satisfy the developer’s outstanding obligations should they default on the particulars of the agreement.
3. Section 220 Agreement Bond (Highways Act 1980) - Advanced Payment Code
An advanced payment code is a legal notice that a local authority serves to a developer. This requires the developer to secure a surety bond to cover the estimated cost to construct a highway on a development.
This bond is only cancelled when the local authority is satisfied a new highway has been constructed to acceptable standards – or a Section 38 Agreement is entered into.
4. Section 21 Scottish Road Agreement Bond (Roads Act Scotland 1984)
A Scottish Road Agreement bond is a financial guarantee provided by a bondsman to the adopting party (Scottish local authority) before work can begin on a housing development.
This surety bond provides a guarantee to the Scottish local authority that the road will be completed to an adoptable standard.
A developer’s inability to comply with the standards agreed in the Scottish Road Agreement bond will allow the Scottish local authority to secure a sum of money from the bondsman (calling in the bond), in order to fund the completion or rectification of the road.