Surety Bond Authority Weblog

The growing need for Motor Vehicle Dealer Bonds

captain — Wed, 31 Mar 2010 01:58:16 +0000

On a national and global scale, more and more vehicles are being purchased and driven than ever before. With the ever increasing amount of vehicle owners on the road, both the value of new and used cars, and the risks associated with car buying have increased alongside. It goes without saying that as more vehicles are being sold at higher prices than ever before, opportunities have arisen and been exploited by dishonest motor vehicle dealers around the country that have sought to take advantage of customers.

Whether it be a used-car dealer masking a vehicle defect from a customer, or a new vehicle dealer taking advantage of car buyers via overly excessive prices, threats certainly exist for today

Understanding Real Estate Agent Bonds and Real Estate Broker Bonds

captain — Tue, 30 Mar 2010 15:07:35 +0000

In each of the 50 states, individuals who sell or serve as brokers for the sale of real estate are required to obtain both the pertinent licenses and real estate agent bonds and/or real estate broker bonds in order to legally conduct business. For these types of surety bonds, the respective state is the obligee (entity requiring the surety bond), while the real estate agent or broker becomes the principal by the nature of them being required to post the bond.

What exactly do they guarantee?

States require these surety bonds in order to guarantee that real estate agents and brokers will abide by all applicable laws governing real estate sales. They also guarantee that agents and brokers will correctly account for and remit money held in trust for their customers. Furthermore, real estate agents and brokers bonds provide protection for the public against any misrepresentation or fraud attempts.

Are real estate agent and broker bonds written freely?

While real estate agent bonds and real estate broker bonds are written frequently, underwriters do apply necessary scrutiny when writing these types of surety bonds. As with most bond types, underwriters are required to conduct a thorough review of both the applicant

The inside scoop on Mortgage Broker Bonds, Mortgage Banker Bonds & Mortgage Lender Bonds

captain — Mon, 29 Mar 2010 21:36:53 +0000

Mortgage broker bonds, mortgage banker bonds and mortgage lender bonds are all obviously closely related to one another in that they all provide some sort of guarantee for the performance on a person or entity involved in a mortgage loan. Often times the same (or very similar) bond form may be used for each of these types. However, they differ in who and what exactly they guarantee. These commercial surety bonds are actually named after the principal of each bond. For example, the principal for a mortgage broker bond is the mortgage broker required to obtain the surety bond.

Mortgage brokers submit mortgage loan applications on behalf of their customers to individual banks and lenders, and then assemble loan costs and escrow funds to submit to banks and lenders they

Classifications for License and Permit Bond Guarantees

captain — Sat, 27 Mar 2010 17:12:08 +0000

There are numerous types of surety bonds that fall under the license and permit bond category, and they can come with a wide variety of guarantees. Below is a list of the primary classifications for guarantees that accompany different types of license and permit bonds.

Compliance-only Bonds: These types of surety bonds guarantee that principals will be in compliance with all pertinent laws for a specific activity or business.

Compliance bonds with third-party liability: Similar to compliance-only bonds, these types of license and permit bonds guarantee that the principal will comply with the laws pertaining to the activity they are licensed for. However, they also come with a guarantee that the surety will pay damages to any third-party group or individual that happens to suffer from any losses incurred due to non-compliance by the principal.

Forfeiture Bonds: When dealing with this classification of license and permit bond, a surety must forfeit the entire amount of the surety bond in the unfortunate event that the principal does not complete a project per the terms of the contract, or is otherwise found to be non-compliant. What makes this different from many other guarantees, is that instead of simply paying for damages incurred as a result of a contract violation the surety must forfeit the entire amount of the surety bond. This is common for license and permit bonds that come with a financial guarantee.

Tax or Fee Bonds: This type of license and permit bond guarantees that the principal will both properly account for and remit taxes and fees collected through the their business operations. Common examples are liquor tax bonds, fuel tax bonds, and sales tax bonds.

Merchandising and Dealer Bonds: Simply put, this classification of license and permit bond guarantees that a principal partaking in merchandising activities will comply with all applicable laws and regulations. Essentially, they act to deter fraudulent practices or misrepresentation by a principal, and provide the necessary protection for the public. A common example would be an auto dealer bond, which protects the public from fraudulent practices by a motor vehicle dealer.

Reclamation and Environmental Protection Bonds: These types of surety bonds guarantee that any land altered or damaged during the course of business operations by a principal will be fully restored to its original state upon completion of work. Details on what specific restoration must take place should be included in the permit filing, and often times can include actions such as planting grass seed, replacing topsoil, etc. In regards to the environmental protection guarantee, principals must promptly clean up any spillage or runoff that could unintentionally pollute local land or water in the vicinity of the principals operation.

For more information, see our section on License and Permit Bonds.

Surety Bond Guarantee Program for Small Contractors

captain — Fri, 26 Mar 2010 23:10:51 +0000

The Small Business Administration (SBA) has developed a Surety Bond Guarantee Program in order to provide smaller contracting firms with assistance in obtaining surety bonds. This program was designed to help small contractors with less experience have an opportunity to become bonded so that they may compete for jobs requiring surety bonds. The program will allow these smaller companies to prove their ability to meet job specifications, and perform well while making a profit. Strong performance with the help of this program can enable less-experienced contractors to build credibility, which could help them acquire surety bonds for future jobs based alone on their company

License Bond amount increase for Arkansas

captain — Sun, 31 Jan 2010 13:36:20 +0000

As of July 1, 2009, HB 1359 established an increase in the license bond amount required for all exterminators of termites and structural pests operating in the state of Arkansas. The license bond amount doubled from $50,000 to $100,000. However, HB 1350 did not increase the surety bond amount required for Arkansas

Lottery and Lotto Surety Bond requirement for Arkansas Vendors

captain — Sat, 30 Jan 2010 12:27:28 +0000

Effective upon the March 25, 2009 enactment of HB 1002/SB 26, all vendors in the state of Arkansas are now required to either obtain a lottery and lotto bond (type of surety bond), a letter of credit, or securities for contracts with the Arkansas Lottery Commission. All surety bond amounts shall be determined by the Commission.

Additionally, lottery retailers in Arkansas must also post a lottery and lotto bond for an amount no greater than the average tickets sales for two of the retailer

Commercial Mortgage Brokers in Arizona

captain — Fri, 29 Jan 2010 14:05:45 +0000

Enacted on July 10, 2009, Arizona HB 2486 mandates that the state

New Arizona law pertaining to Mortgage Loan Originators

captain — Fri, 29 Jan 2010 00:00:25 +0000

Effective on October 2, 2009, Arizona House Bill (HB) 2143 mandates that all mortgage loan originators operating in the state must be officially employed by either a consumer lender, mortgage banker or a mortgage broker. These mortgage loan originators must also be covered by their employer

Surety Bond coverage requirement for Alabama

captain — Sat, 23 Jan 2010 15:45:07 +0000

Alabama SB 249, which was enacted on May 21, 2009, created a licensing requirement for all mortgage loan originators, as well as a requirement for them to be covered by a surety bond. However, the law does allow mortgage loan originators to use the surety bond of someone whom they are an employee or an exclusive agent of, as long as that person is subject to the Mortgage Brokers License Act (SB 232) or the Alabama Consumer Credit Act (SB 234). This license bond needs to provide ample coverage for each mortgage loan originator in an amount equal to the amount of the originated loans.

This new law became effective in Alabama on June 1, 2009, but the licensing requirements will not go effective until June 1 of this current year.