What a permit bond is
Some cities and counties require a bond before they issue a building or work permit. It guarantees you'll follow local codes and the permit conditions, and pays the agency if you don't, for example if public property is damaged.
In Tennessee
T.C.A. § 62-6-137 is a state enabling statute that allows any municipality or county to require permit bonds from contractors, but only after the local governing body adopts the requirement by a two-thirds vote. Bond amounts are fixed by the statute: $10,000 for building permits under $25,000, $50,000 for building permits of $25,000 or more, and $40,000 for gas/mechanical, plumbing, and excavation permits. Several Tennessee jurisdictions including Nashville/Davidson County have adopted permit bond requirements under this authority.
- The requirement takes effect only after a formal vote of the local governing body; it is not self-executing.
- A contractor working multiple trades or on more than one structure may provide a single $50,000 bond to satisfy all local permit bond requirements under the statute.
- Nonprofit housing ministries are explicitly exempt under T.C.A. § 62-6-137.
You need this bond if you're
- A contractor pulling permits where the city or county requires a bond
- Demolition and house-moving contractors
- Sign, sewer and grading contractors
- Owner-builders in some jurisdictions
What the surety looks at
Basic business details and credit.