Surety Bond Insider

Appraisal Management Companies in New Mexico Must Post $25,000 Bond up from $10,000

February 18, 2015 by Emily Jo Pahl Leave a Comment

As of January 2015, all appraisal management companies (AMCs) in New Mexico are required to post a $25,000 surety bond according to new legislation. Prior to this revision, the New Mexico Regulation and Licensing Department required AMCs to secure a bond in the amount of $10,000. This increase was established in hopes to hold AMCs more accountable to the bond regulations and conditions they agreed upon and also reduce fraudulent behavior occurring among AMCs.

Appraiser reviews real estate listing with seller for a residential property appraisal

photo courtesy of home.howstuffworks.com

Along with the increased bond amount, corporate surety companies can now pay individuals filing a claim against the principal directly with the proper approval from the Board. Otherwise, all previous appraisal management company bond requirements have remained the same.

The principal is expected to follow all rules and regulations for this bond in a professional and ethical manner without the intent to commit deceitful business practices that could harm his or her clients. Failure to maintain a surety bond at all times while performing real estate appraisal may result in the revocation of the AMC registration. If the bond becomes ineffective or gets canceled before the designated date of expiration, the AMC should notify the Board. The AMC then has 40 days to provide proof of the obtainment of a new surety bond, otherwise it will become subject to revocation of registration.

If you find yourself falling under the category of needing a new surety bond of the updated amount, it’s highly recommended that you contact a surety specialist as soon as possible to avoid legal non-compliance. You can speak to a surety expert today at 1 (800) 308-4358 or submit a request online at suretybonds.com/quote for a free no obligation quote. For more information, visit our New Mexico AMC bond page.

Filed Under: Bond Legislation Updates, License & Permit Bonds, News, Surety Bond News

Appraisal Management Companies in Virginia now required to post $100,000 surety bond

February 4, 2015 by Brian Ruehlmann Leave a Comment

Effective February 1, 2015, appraisal management companies (AMCs) in Virginia must obtain a $100,000 surety bond from the Virginia Department of Professional and Occupational Regulation to legally operate in the state. All appraisal management companies must also receive an approved license from the Real Estate Appraiser Board effective February 1. The purpose of this new legislation is to enforce stricter regulation of appraisal management companies to help ensure the compliance with state law and faithful business practices.

What are the new bond requirements?

$100,000 bond
Holds principal responsible if there is failure to comply with Title 54.1, Chapter 20.2 of the Code of Virginia
Aggregate liability of surety cannot exceed penal sum of bond ($100,000)
Valid until AMC license expires, at which bond automatically renews for additional 2-year licensure periods unless the surety notifies the Real Estate Appraiser Board at least 60 days prior to expiration that it wishes to cancel the bond

What are licensing requirements?

Name, business address, phone contact and email for individual or entity applying for licensure
Name, address and contact information for any owner with at least 10% in the company
If the entity is not located in Virginia, proof that the entity is registered with the Virginia State Corporation Commission
Proof that the entity has a system in place to ensure compliance with the Uniform Standards of Professional Appraisal Practice
Proof that the entity maintains detailed record of:
- every request for an appraisal service the AMC receives
- the name of every appraiser that conducts appraisal
- addresses of subject property
- name of AMC’s clients
- amount paid to the appraiser
- amount paid to the AMC
Proof that the entity has a system in place to ensure compliance with Section 129E of the Truth in Lending Act

The license application for AMCs in Virginia is available here. All appraisal management companies must receive approved licenses from the Real Estate Appraiser Board by February 1, 2015.

What’s the Next Step?

Since these regulations went into effect February 1, you must secure your bond as soon as possible in order to meet legal requirements for doing business in Virginia as an appraisal management company. Ensure you obtain licensure by contacting a reliable surety provider. The surety experts at SuretyBonds.com are available to answer any questions you might have at 1 (800) 308-4358 and can get your bond application processed today.. You can also submit an application request online at suretybonds.com/quote.

Filed Under: Uncategorized

Congress proposes bid bond requirement for Medicare DMEPOS competitive bidding

January 14, 2015 by Brian Ruehlmann Leave a Comment

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On December 8, 2014, Ohio representative Patrick J. Tiberi introduced HR 5809, entitled Medicare DMEPOS Competitive Bidding Improvement Act of 2014, to the House of Representatives.

What is the DMEPOS Competitive Bidding Program?

The DMEPOS Competitive Bidding Program was established by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. The program implements a competition between suppliers for selected Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) in a given competitive bidding area (CBA). The goal of the program is to reduce out-of-pocket expenses for beneficiaries of Medicare and save money for the Medicare program while ensuring beneficiary access to quality items and services.

How does the DMEPOS Competitive Bidding Program work?

The bidding process involves 4 steps:

Suppliers submit a bid for selected products through a web-based application.
Program representatives review the bids and evaluate them for eligibility, bid price, financial stability and more.
Contracts are awarded to the most attractive bids.
Contract suppliers are paid the bid price amount, which is determined based on a median of all winning bids for an item.

What are the proposed surety bond requirements?

According to the text, the purpose of this bill is:

“To amend title XVIII of the Social Security Act to require State licensure and bid surety bonds for entities submitting bids under the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive acquisition program, and for other purposes.”

If passed, the Medicare DMEPOS Competitive Bidding Improvement Act of 2014 would require bidders to secure a state license and a bid surety bond to participate in the DMEPOS competitive bidding program. Its purpose is to provide evidence of financial stability among bidders. The required amount of the bid bond would not be less than $50,000 or more than $100,000 for each competitive bidding area.

For successful bidders who do not accept the offered contract, the bidding entity will forfeit the bid bond if the bid is at or below the product category’s median composite bid rate. If the bid is above the product category’s median composite bid rate and the successful bidder does not accept the contract, the Secretary will return the bid bond within 90 days of the notice of nonacceptance. Likewise if the bid is unsuccessful, the Secretary will return the bid bond within 90 days of the notice of nonacceptance.

The last action on this bill occurred on December 12, 2014, when it was referred to the Subcommittee on Health by the House Energy and Commerce.

The experts at SuretyBonds.com are on the lookout for more information and will publish more about this potential surety bond requirement as it becomes available. In the meantime, if you have any questions about bid and other types of surety bonds, click here to connect with an expert surety specialist. Or, give us a call at 1 (800) 308-4358 between 7 a.m. and 7 p.m. CST Monday through Thursday or between 7 a.m. and 6 p.m. CST on Friday

Filed Under: Bond Legislation Updates

Surety Bond FAQs, Part 3

January 5, 2015 by Sara Aisenberg Leave a Comment

At SuretyBonds.com, we understand that most business professionals don’t know about surety bonds until they need one. That’s why our experts go the extra mile to explain the intricacies of bonding, from what a surety bond is, to why you need one, to how much your bond will cost and everything in between. Today, we’ll answer some frequently-asked questions about surety bonds in the final part of our 3-part series. Read part 1 here and part 2 here.

In part 2, we discussed if and when surety bonds must be renewed. Here’s a little more information about the renewal process.

How do you renew your surety bond?

Whether the bond has a set expiration date, specific term or expires when the principal’s license expires, most surety bonds must be renewed prior to the bond’s expiration. To renew your bond, you’ll pay a renewal premium to your surety provider. Typically, renewal premiums are similar to the premium price you paid for your initial surety bond. There is a chance that your premium could increase or decrease, however, if there were significant changes to the bond requirement or your credit report. Most principals submit their bond renewal applications to the surety provider that issued the initial bond because they already have their financial history on file, resulting in a more efficient renewal process.

What should you do if you want to cancel your bond?

Give us a call at 1 (800) 308-4358. Our trained surety experts can guide you through the process of cancelling your surety bond and answer any other questions.

What should I do if my surety bond is canceled?

A surety underwriting company can cancel a surety bond at any time for a number of reasons. Although there is typically a cancellation clause in the bond requiring the surety to provide the other two parties in the agreement with a cancellation notice, surety underwriters retain the right to cancel most bonds if they wish. This usually occurs if claims have been made against the bond and the principal has shown a tendency to violate the terms of the surety bond. agreement. If this occurs, you can reapply for the bond, but should expect to pay a higher premium rate if approved due to a higher risk.

Have more questions? Our experts are ready to assist you with all of your bonding needs. Give us a call at 1 (800) 308-4358 between 7 a.m. and 7 p.m. CST Monday through Thursday and between 7 a.m. and 6 p.m. CST on Friday. Or, you can submit an online contact form, and one of our surety specialists will get in touch with you right away. For more information from SuretyBonds.com, check out our Facebook, Twitter, Google+ and LinkedIn profiles. You can also peruse our YouTube video library and online answer forum.

Filed Under: Surety Bond Education

Surety Bond FAQs, Part 2

December 17, 2014 by Sara Aisenberg Leave a Comment

What is the difference between license and permit/commercial, construction and court bonds?

There are 3 categories of surety bonds:

license and permit bonds (also called commercial bonds)
construction bonds
court bonds

License and permit bonds, also known more simply as “license bonds” or “permit bonds”, are a specific type of commercial bonding. Government agencies require business owners in certain industries to purchase these bonds before they can be legally licensed. They protect consumers by guaranteeing businesses adhere to laws and other regulations enforced by federal, state and local government agencies. Commercial bonds are typically purchased by companies and working professionals who need surety bonds for purposes unrelated to legal issues, construction projects or other contracted work. Most commercial bond types are used to reinforce laws such as license and permit regulations. They’re generally less risky for insurance companies to underwrite than contract and court bonds, so they’re relatively easy for most individuals to qualify for.

The terms “contract bond” and “construction bond” are essentially two different names for the same thing. A contract bond is a type of surety bond that guarantees contracts are fulfilled. If the contracted party fails to fulfill its duties according to the bond’s terms, the project developer can make a claim on the bond to recover financial losses. Although they can be used for many reasons, contract surety bonds are most commonly used in the construction industry to ensure projects are completed according to contract. For this reason, “contract bond” and “construction bond” are often used interchangeably.

Court proceedings often require certain parties to file surety bonds to verify their personal credibility and financial integrity both in and out of the courtroom. A bond might be required for one of many reasons, such limiting the potential financial loss following a court ruling or ensuring completion of a court-appointed task.

Although they fall into different bonding categories, the price you’ll pay for a license and permit/commercial bond, a construction bonds or a court bond is based on the following factors:

bond type
bond amount
applicant’s financial credentials, in some cases

Do surety bond costs vary for different states?

Most surety bonds are regulated by various government agencies at the state level, so your required bond amount and, therefore, the premium you’ll pay for your bond varies by state and by bond type. Although the state you do business in does not directly affect the rate you pay (that is determined by your financial history), each state has its own surety bond amounts and requirements. For example, motor vehicle dealers in Alabama must post $25,000 surety bonds, while motor vehicle dealers in Michigan must post $10,000 surety bonds. This means that an an applicant in Alabama will pay more for his or her auto dealer bond than an applicant in Michigan with the same credit score will.

Does it cost to apply for a bond?

It does not cost anything to apply for a surety bond. If you’re not satisfied with your free surety bond quote, you’re not obligated to pay a dime. You’ll pay for your bond once you accept your surety bond quote and are ready to purchase your bond quickly, easily and accurately.

When do you pay for your surety bond?

Typically, you’ll pay your bond premium upfront before or on the effective date of your surety bond. In some cases, financing is available to break up your bond premium payments into smaller, more manageable amounts. Paying by credit card is the fastest way to ensure your payment is received so your bond can be issued quickly and easily. Checks are also an acceptable form of payment, but take a little longer to process.

Do you need to renew your surety bond?

It depends on the bond. Since many contractor bonds are project-based, they expire after the project is complete and there is no need to renew them. License and permit bonds oftentimes remain in effect for a fixed period of time or for as long as the bondholder’s license is valid. If there is an expiration date for the bond, you have to renew your bond before that date to remain in compliance with the laws of your state and industry. If you’re unsure about the terms of your surety bond, you can contact the government agency in charge of licensing and registration for your industry to clarify.