What are Supersedeas (Appeal) Bonds?
A supersedeas bond, which is often referred to as an appeal bond, is a kind of surety bond that is required in certain court cases. When an individual or entity is appealing a judgment to a higher court, the bond ensures that the appellant will not evade financial responsibility for the initial court decision, if the appeal fails.
Surety bonds work like a contractual agreement between three parties. The principal is the entity that needs to post the bond, the appellant. The obligee in this case is the respective court. The surety is the bond provider that backs up the principal.
The appeal bond is one main type of court bond. It guarantees the financial strength and trustworthiness of litigants appealing court judgments, protects courts from plaintiffs that break their financial obligations under the bond, and ensures compliance with court decisions.
Appellants need to post a minimum of 100% collateral, which is the initial judgment amount. Other costs and interest can increase this percentage as well.
The purpose of requiring a full collateral is to discourage abuse of the appeals court system. If litigants just want to extend a judgment or avoid covering financial costs, the high price of making an appeal would persuade them against such a course of action. The collateral is also used to reimburse the court, without financial loss for the surety backing the plaintiff.
Questions about Appeal Bonds
Who needs to obtain a supersedeas bond?
A variety of individuals and entities might have to post a supersedeas bonds in relation with appealing a court decision to a higher authority. The appeal cannot be made before they fulfill this requirement. Both federal and state courts can require the posting of an appeal bond.
This prevents misuse of the appellate system and reduces the burden from fake or manipulative appeals. In case the appeal does not succeed, the appellant is thus guaranteed to pay the financial costs of the first court ruling.
Are there different types of supersedeas bonds?
There’s only one kind of supersedeas bond, so you don’t need to worry about choosing the right kind when obtaining it.
How much does a supersedeas bond cost?
The cost of an appeal bond is set on the basis of individual circumstances when a plaintiff brings a specific case to an appellate court.
Unlike the cost of other surety bonds, the supersedeas bond cost does not depend on the personal credit score of the bond applicant. Because it’s difficult to predict the decisions in court cases, appeal bonds are seen as high-risk. That’s why appellants have to pay at least 100% collateral in order to get bonded.
Besides the collateral, the plaintiff needs to pay a bond premium, a percentage of the surety bond amount. This amount depends on the specific court case and is usually equal the financial costs set in the initial court judgment.
Can I get a supersedeas bond with bad credit?
Because of the particularity of supersedeas bonds, there are no special bonding markets for them. Getting an appeal bond is possible only with good finances, so there are no bad credit bonding options. In general, obtaining supersedeas bonds is more difficult and requires a higher financial responsibility on the side of the bond principal.
As supersedeas bonds are high-risk surety bonds, the minimum requirement for 100% collateral is in force. Appeal bond applicants should thus prepare to cover these costs to get bonded.
How do I get a supersedeas bond?
For a detailed overview of the bonding process, make sure to review our How to Get Bonded page.