Surety Bond Encyclopedia

Highway Right of Way Permit Bond - Statewide in Alabama

Brief Summary

ALDOT will not issue a permit to dig, bore, pave or build on a state highway right of way without a monetary guarantee in hand, and the surety bond is the one option that does not tie up your own cash with the state. The bond is written on ALDOT's own form naming the Alabama Department of Transportation as obligee, a single permit bond covers one job, and a blanket bond covers every permit you pull in a district, area, region or statewide for as long as it stays in force.

Anyone performing work on an Alabama state highway right of way, whether a driveway, utility line, drainage tie in, or any other encroachment, must hold an ALDOT permit, and the ALDOT Permit Manual requires a monetary guarantee of performance for every permit request. The Region or Area sets the amount at whatever it would cost to hire a contractor to finish the permitted work or remove it and restore the right of way. The guarantee can be a surety bond on ALDOT form BM-174 for one permit or BM-175 as a blanket bond covering multiple permits, and it must stay in force for one full year after ALDOT accepts the work.

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How to Apply for a Highway Right of Way Permit Bond:

Contact the ALDOT district office covering the highway where the work will take place and get the bond amount the Region or Area Engineer has set for your permit.
Decide between form BM-174 for a single permit and form BM-175 as a blanket bond if you expect to pull permits repeatedly in a district, area, region or statewide.
Have the exact legal name of the permittee, the highway number and county for a single permit bond, and the geographic scope for a blanket bond.
Complete the surety application with owner name, address and Social Security number for the credit review.
Pay the premium and receive the executed ALDOT bond form with the surety's power of attorney and the Alabama producer countersignature.
File the bond with the permit application at the district office and keep it in force for one full year after ALDOT accepts the completed work.

Detailed Information About the Alabama Highway Right of Way Permit Bond:

There is no single bond amount

The most common mistake is looking for a fixed dollar figure. The ALDOT Permit Manual says a monetary guarantee of performance is required for all permit requests and that the amount must be sufficient to hire a contractor either to perform the permitted work or to remove it and return the right of way to its original condition. The Region or Area Engineer sets that number for each permit. Get the amount from the ALDOT district office that is handling your permit before you order the bond, because every permit originates in a district office.

Two ALDOT bond forms

Form BM-174, Bond for Performance of the Work, covers a single permit on a named highway in a named county. The surety promises that the permit contract will be faithfully and promptly performed, and if the principal fails to prosecute the work the surety must finish it or pay the department to do so. Form BM-175, Highway Occupancy Permit Blanket Bond, is the version for contractors and utilities that pull permits repeatedly. It can be written district wide, area wide, region wide or state wide and covers every permit issued to the principal while it is in force. Under BM-175 the surety cannot cancel without written permission of the ALDOT Permits and Operations Section unless every obligation under existing permits is complete, and even then 90 days notice is required. Both forms name the Alabama Department of Transportation as obligee and must be countersigned by an Alabama licensed insurance producer with the surety's power of attorney attached.

How long the bond must stay in force

The Permit Manual requires the guarantee to remain valid for one full year after the work is accepted by the department. Form BM-175 states the same tail, covering the work period plus one year after ALDOT accepts the final permitted activity. Budget for the bond to run well past the day the crew leaves the site.

Who is exempt and who is not

State agencies do not have to post a bond for right of way work unless the work involves placing utilities. The Region or Area Engineer may waive the bond for counties and municipalities for work other than utilities. Every utility permit must be accompanied by a bond, with no exceptions for public utilities or governmental entities. Private contractors, developers and property owners post the bond on every permit.

Other acceptable guarantees

ALDOT accepts a cashier's check, certified check, personal or company check, or money order payable to the Alabama Department of Transportation in place of a surety bond. Those options lock up the full amount for the life of the permit plus a year. The surety bond costs an annual premium instead, which is why it is the usual choice.

Authority

Alabama Administrative Code Rule 450-3-1-.11 bars any structure or private property from being constructed or maintained on a state highway right of way without a permit or prior written permission from ALDOT. The permit program, bond forms and the Permit Manual are administered by the Permits and Operations Section of the ALDOT Maintenance Bureau at (334) 353-6554. Confirm the current form revision and the required amount with the issuing district office before the bond is executed.

Eligibility and Requirements for a Alabama Highway Right of Way Permit Bond:

A surety company authorized to write surety bonds in Alabama, with the bond countersigned by an Alabama licensed insurance producer.
Alabama Department of Transportation named as obligee on form BM-174 or BM-175.
Penal sum set by the ALDOT Region or Area at the cost to perform or remove the permitted work.
Bond remaining in force through the work and for one year after ALDOT accepts it.
Power of attorney from the surety attached to the executed bond.
Owner credit review, which drives the premium rate more than eligibility.

Alabama Highway Right of Way Permit Bond FAQs:

How much is the Alabama highway right of way permit bond?

ALDOT does not publish a fixed amount. The Permit Manual directs the Region or Area to set the bond at what it would cost to hire a contractor to complete the permitted work or to remove it and restore the right of way. The district office handling your permit tells you the figure, and the bond is written for that amount.

We are a utility. Can we skip the bond?

No. The Permit Manual states that all utility permits must be accompanied by a bond. State agencies are excused from bonding for non utility work and counties and cities may be granted a waiver for non utility work, but utility placement always requires the bond.

Can I post one bond for all my ALDOT permits?

Yes. Form BM-175, the Highway Occupancy Permit Blanket Bond, covers every permit issued to the principal within the district, area, region or statewide scope written on the bond for as long as it stays in force. It is the practical choice for contractors and utilities that work on state right of way regularly.

When can the bond be released or cancelled?

The guarantee must remain valid for one full year after the department accepts the work. On the blanket form the surety may terminate only on 90 days notice to ALDOT and only when all obligations under existing permits have been completed, and otherwise not without written permission of the Permits and Operations Section.

Can I give ALDOT a check instead of a bond?

Yes. ALDOT accepts a cashier's check, certified check, personal or company check or money order payable to the Alabama Department of Transportation. The money stays with the department for the life of the permit plus the one year tail, which is why most permittees use a surety bond and pay an annual premium instead.