Receiver Bonds Explained
Receiver bonds are a type of court bonds. They are required by a court from a receiver who is in charge of securing property and assets related to a current case.
The receiver bond is a security mechanism in cases when the receiver has not followed their obligations and the plaintiff receives a judgment against them. By bringing a claim against the bond, the plaintiff can obtain compensation for suffered damages due to the receiver's negligence or other harmful actions.
The receiver bond functions as a contract between three entities. The principal is the receiver who needs to get bonded. The obligee is the court or other authority appointing the receiver, as well as ensuring that the bond will protect the plaintiff. The surety is the third party, which is the bond provider.
Questions about Receiver Bonds
When is a receiver bond required?
Receivers can be placed in charge of property, assets, and management of businesses in cases of insolvency or legal disputes over ownership. You may need to provide a receiver bond if you have to act as a receiver in a court case, or are appointed by a government entity. The bond guarantees you will comply with applicable laws and will adhere to your obligations under the receivership. It can provide compensation in case you fail to fulfill your duties as a receiver while handling the entrusted valuables.
What is the bond cost involved?
The price that you have to cover to obtain a receiver bond is based on the bond amount that the court imposes. Typically, it is proportional to the value of the property or assets that you are in charge of. This guarantees its full protection.
The surety bond cost that you will need to pay is a small percentage of the required amount, also known as the bond premium. It is usually around 1%-2% for receiver bonds.
Your surety will have to judge the strength of your finances in order to determine the exact cost. The most important factors in this assessment for individuals are your credit score and financial statements, while for businesses, the business financials and statements are key. On the basis of these indicators, the surety will evaluate how risky it is to extend bond coverage to you.
Is bad credit a hindrance for getting a receiver bond?
For most court bonds, a stable financial profile is essential to the issuance of a bond. Thus, if you have bad credit, obtaining a receiver bond would be difficult and in many cases, not possible.
How do I get bonded?
The process for obtaining a receiver bond is the following:
Submit a copy of your Court Order and any special court bond language
Submit a blank copy of the bond form (if available)
Send your complete application to [email protected] or fax it to (267)-362-4817.
Interested in learning more about the bonding process? You can find extensive details in our guide on How to Get Bonded page.
Lance Surety Bonds' experts are here to assist you with your queries. You can reach us at (877) 514-5146.
How are bond claims handled for receiver bonds?
If you do not fulfill your duties as a receiver, you may end up with a bond claim. The plaintiff can file a claim if they have obtained a judgment against your performance as a receiver. By doing this, they can demand a fair reimbursement.
As with other bond claims, at first, your surety may cover the costs of the compensation, in order for the plaintiff to receive them on time. However, you are fully liable to reimburse the surety. Thus, all bond claims are ultimately the responsibility of the bonded party.