13 Jun Non-Contract Commercial Surety Bonds
Non-Contract Commercial Surety Bonds
Commercial surety refers to the balance of surety that is not Contract Surety (Performance and Payment Bonds). This includes License & Permit; Public Official; Court Bonds; Probate (Fiduciary); and Financial Guarantee.
Non-Contract Commercial Surety Bonds -License & Permit Bonds
Required to obtain a license or permit in many Cities, Counties, States and/or Other Political Subdivisions. Good examples of these types of bonds are California’s Contractors State License Board (CSLB) Bond of $12,500; Nevada Contractor’s License Bond; California Farm Labor Contractor License Bond; California Car Wash Bond; Sales and Use Tax Bonds; Wine Bond; Direct Shipper Bonds; Warehouse Bond; and Certificate of Title Bond. These bonds are required for a business license, so any person who has a transaction with those businesses can be reasonably assured of the following:
• The business can do what the license states.
• Will comply with the codes, and/or laws that the bond is required.
• For the benefit of employees who have not been paid wages due them. (CSLB, NV Contractor License Bond, CA Car Wash Bond, etc.) Or,
• Remit taxes (Sales and Tax Bonds).
In other posts will get into a little more detail of these types of bonds and how the underwriting process begins.
Non-Contract Commercial Surety Bonds – Public Official
The most common Public Official Bond is the Notary Bond. This bond is required by the Secretary of State. The bond guarantees the Principal will honestly and perform all duties. This means the Notary Public will attest that the person signing the document did so in person and the Public Notary witnessed the signature. The other Public Official bonds needed are for Treasures, Tax Collectors, Clerks, Sheriffs, etc. The Principal (Office Holder) will honestly and faithfully perform all duties, and remit and account for public funds. The bonds can be executed for the individual Principal; Multiple Principals and/or Multiple Positions.
Non-Contract Commercial Surety Bonds Court
The bonds are necessary to the party (Plaintiff or Defendant) in a lawsuit. The Plaintiff can attach the property (Attachment Bond); file the injunction (Injunction Bond); guarantee the seized property will be in same condition and not sold (Replevin Bond); etc. Defendants in a lawsuit can post a bond to release the attachment; appeal the judgment; etc. Each has their own set of underwriting guidelines.
One bond, which is requested by sellers or buyers of Real Estate, is the ‘Release of Mechanic Lien’ Bond. This bond is used to provide a ‘Clean Title’ on a real property. The lien is replaced by a bond. This does not mean the lien is voided, and no one gets paid. The Surety Company and Principal now have to deal with the Entity that field the lien.
Non-Contract Commercial Surety Bonds Probate (Fiduciary)
Probate (Fiduciary) Bonds deal with issues of an individual’s estate. In most wills and/or trusts an attorney will indicate the executor or trustee will serve without bond. However, if you do not have a will or the Executor or Trustee is not able to serve; the Probate Court Judge may require the Administrator or replacement Executor to provide a bond.
The other types of Probate Bonds are Guardian/Conservator of Incompetent and Guardianship of Minor. Conservatorship of Incompetent bond guarantees the financial well-being of the disabled person and protects against unethical or illegal actions of the Conservator. Guardianship of Minor bond guarantees the financial well-being of the minor and protects against unethical or illegal actions of the Guardian until the age of majority (legal age to make own decisions).
Non-Contract Commercial Surety Bonds Financial Guarantee
The Financial Guarantee bond obligates the Surety Company will pay a sum of money if Principal does not fulfill a financial obligation. Best examples of Financial Guarantee bonds are the ‘Lost Instrument’ and the ‘Lost Deed/Title’ bonds. Both of the bonds are guaranteeing that the instrument is lost. The guarantee is the Principal has lost the instrument, and the Obligee is the entity stating to receive payment or title; therefore, you must provide the bond. The Surety is guaranteeing the item in a dollar amount to the Obligee.
In future blogs we will delve more into each specific Surety Bond Category.
Non-Contract Commercial Surety Bonds – 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. 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.
*Please note that this blog post is for informational purposes only. The information included is opinion, and should not be used to guide legal decisions.
All information is general in nature and is intended to provide guidance only. It is up to you to request specific coverage options, the agency and agent do not bear this responsibility. Always read the policy if there is a questions about coverage or a claim. If any information herein should conflict with your actual policy’s specific language, the policy language will be controlling.