Commercial Surety The Lost Note Deed of Trust

In previous posts on Commercial Surety, we had a post concerning the types of Commercial Surety Bonds. Because it is the height of the home sales season, while infrequent, the ‘Lost Note/Deed of Trust’ bond does come up and usually when it is a pressure situation to close on the property.

To review:  The Financial Guarantee bond obligates the Surety Company will pay a sum of money if Principal does not fulfill a financial obligation. A good example of Financial Guarantee bond is ‘Lost Note/Deed of Trust’ bonds. The bond is guaranteeing that the instrument is lost. The guarantee is the Principal has lost the instrument, and the Obligee is the entity, which will receive a good clean clear quiet  title; therefore, the bond solves the problem. The Surety is guaranteeing the item in a dollar amount to the Obligee.

Long story short, the ‘Lost Note/Deed of Trust’ bond is required when the title, loan or re-conveyance is lost. The person selling or refinancing the real property needs to demonstrate the property has a ‘free and clear’ title or the other interests (think Lenders) are the only interests (Lenders) on property. Sometimes that person can’t demonstrate this, and the Title Company, to protect the buyer, lender, and itself, requires a bond for the ‘Lost Note/Deed of Trust’. (The person definition does include Trusts, Administrators, Executors, and of course real live people.)

The rate for this bond can range from 1.5% of the required amount to as much as 10% of the required amount. If there is no loan on the property, and the person applying for the bond has adequate credit—the rate can be as little as 1.5% of the required amount. If there is a loan on the property, and the person does not have good credit- the rate can be towards the higher range.

The premium on a $200,000 ‘Lost Note/Deed of Trust’ at the 1.5% rate can be $3,000. Yes it does seem expensive; however, this bond will allow you to sell/refinance the real property with the knowledge you now have a ‘quiet’ title. Without demonstrating a ‘quiet’ title, you will be hard pressed to sell the real property.

The underwriting part of the ‘Lost Note/Deed of Trust’ bond can be in depth; however, most of the required documentation has been completed by you and the Lender or Title Company has this completed information.

Commercial Surety The Lost Note Deed of Trust – Why Use a Broker?

The best second opinion for surety is always with a Broker. Why? Because as a Broker, we represent many Surety Companies, and will find the best match for you. As demonstrated above, rates can vary for the ‘Lost Note/Deed of  Trust’ bond- a Broker will guide you to the best outcome. If you or your Company are interested in Surety Bonds: we are more than happy to sit down and provide the information necessary for this second opinion. Please call us at (925) 297-4202 or fill out the form at right.