Banks honour bonds given to developers
SURETY PAYS COMPLETION COSTS
BANKS have so far honoured bonds given to developers of estates in Fingal whose businesses have now run into trouble during the economic downturn.
Bonds are a guarantee from a financial institution to the local authority accepting responsibility for any default in completing a development.
It remains enforced until such time as the work is completed in accordance with the planning permission.
If the development is not completed, or on default by the developer, the surety shall pay the costs associated with completing the development subject to the limit declared in the bond.
Director of Planning Gilbert Power said the bonds applied to a development regardless of whether the developer goes into liquidation.
He said there had been two situations in Fingal already, one in Rush and the other in Balbriggan where builders had gone to the wall.
In relation to the Rush development, he said the bond was with Ulster Bank and that there had been no difficulty in relation to it.
In respect of the Balbriggan development, a bond for € 300,000 had been sold on by the Bank of Scotland to another company but there hadn't been a difficulty in relation to it.
He said the out of 26 bonds and letters examined by the council, seven were given by the CIF, five were from insurance company and 14 were from banks.
Of those banks, 11 of them were State funded or else had received State aid, councillor were told.
