Deferred Payment (Deferred Consideration) Bonds

Who are they for? Companies making large acquisitions and commercial and residential property developers

When making a substantial purchase for what could be a company or a piece of land, there may be a requirement to pay a fixed sum upon legal completion with the remaining consideration to be deferred over a set period. In cases like this, the seller may require a form of security which ensures that they will receive their deferred monies in the event that the purchaser becomes insolvent or defaults on future instalments. Such security can be provided as a deferred consideration bond (also known as deferred payment bond) which would be issued by a Surety. By deferring consideration beyond the legal completion date, the buyers liquidity/cashflow can be improved.