Section 162.434 - Must a lessee provide a performance bond for a business lease?The lessee must provide a performance bond or alternative form of security, except as provided in paragraph (f) of this section.
(a) The performance bond or alternative form of security must be in an amount sufficient to secure the contractual obligations including: (1) No less than: (i) The highest annual rental specified in the lease, if compensation is paid annually; or(ii) If the compensation is not paid annually, another amount established by BIA in consultation with the tribe for tribal land or, where feasible, with Indian landowners for individually owned Indian land;(2) The construction of any required permanent improvements;(3) The operation and maintenance charges for any land located within an irrigation project; and(4) The restoration and reclamation of the leased premises, to their condition at the start of the lease term or some other specified condition.(b) The performance bond or other security: (1) Must be deposited with us and made payable only to us, and may not be modified without our approval, except as provided in paragraph (b)(2) of this section; and(2) For tribal land, if the lease so provides, may be deposited with the tribe and made payable to the tribe, and may not be modified without the approval of the tribe.(c) The lease must specify the conditions under which we may adjust security or performance bond requirements to reflect changing conditions, including consultation with the tribal landowner for tribal land before the adjustment.(d) We may require that the surety provide any supporting documents needed to show that the performance bond or alternative forms of security will be enforceable, and that the surety will be able to perform the guaranteed obligations.(e) The performance bond or other security instrument must require the surety to provide notice to us at least 60 days before canceling a performance bond or other security. This will allow us to notify the lessee of its obligation to provide a substitute performance bond or other security and require collection of the bond or security before the cancellation date. Failure to provide a substitute performance bond or security is a violation of the lease.(f) We may waive the requirement for a performance bond or alternative form of security if either: (1) The lease is for religious, educational, recreational, cultural, or other public purposes; or(2) The Indian landowners request it and we determine a waiver is in the Indian landowners' best interest.(g) For tribal land, we will defer, to the maximum extent possible, to the tribe's determination that a waiver of a performance bond or alternative form of security is in its best interest.