Surety Bond Now Required for Kentucky Timber Sales

timber sales

New legislation in Kentucky will require winning bidders on timber sales to furnish a surety bond. Also included in the Kentucky Administrative Regulations 402-3:010 are further guidelines for timber sales. The regulations apply to timber harvested from Kentucky state forests. Timber sales are managed by the Department for Natural Resources’ Division of Forestry.

The amount of surety bond coverage that must be purchased varies depending on the value of timber sold. Major timber sales, classified as sales valued at $25,000 or more, require a surety bond of no more than 10% of the established minimum bid, but no less than $2,500. Bidders also have the option of depositing a certified check with the Division of Forestry in the required amount to act as their bond. Minor timber sales, valued at less than $25,000, require a performance bond of $500 or 5% of the winning bid amount, whichever is greater.

In addition to the bond provision, the legislation establishes guidelines for advertising, contracts, compliance and minimum bids for major timber sales.

Advertising

The Division of Forestry must advertise the sale at least once in three newspapers, or three times in one newspaper. A packet must be sent to prospective buyers at least three weeks prior to the sale containing the following information:

  • Timber sale prospectus (sample here)
  • Form SF-4, bid for advertised timber
  • Form SF-3, timber sale contract
  • Summary of timber marked if the trees are individually designated (sample), or a cruise summary if it is a boundary sale
  • Map of the sale area
  • Self-addressed sealed bid envelope

Contracts

Timber sales must be sold via written contract and full payment must be submitted within five business days of the contract being awarded. Bidders must also submit a certified check that is less than 10% of the established minimum bid but no less than $2,500 with their bid as a sign of good faith. Checks should be made payable to the Kentucky State Treasurer. Unsuccessful bidders’ deposits will be returned.

Successful bidders must submit their surety bond within five business days of their contract’s date. The bond will be held until completion of the contract’s terms.

Compliance

The timber purchaser must adhere to all terms of their contract and applicable laws. A local state forest administrator will inspect the operation every two weeks to ensure compliance. If the purchaser is in non-compliance with the contract, the operation can be suspended or terminated. Upon the contract’s completion and payment of any incurred damages, the Division of Forestry will release the purchaser’s bond.

Minimum Bids

A minimum bid must be determined for each sale and be included in each timber sale packet. The legislation also offers guidelines for calculating the minimum bid, which can be altered in some circumstances. If no bids are made on the timber, negotiations can be made for its sale with the approval of the Director of the Division of Forestry.

The Kentucky Division of Forestry can answer your questions about purchasing timber. SuretyBonds.com can guide you through the bonding process and help you get bonded in Kentucky.

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About the Author

Melanie Baravik
Melanie is a senior at the University of Missouri - Columbia studying English with an emphasis in creative writing. She is a member of the marketing department and outreach team for SuretyBonds.com, a leading provider of online bonding for clients nationwide.