Enacted legislation plays a vital role in the surety bond industry, especially when it comes to commercial surety. New bills often bring changes to licensing and bonding requirements, such as an increase or decrease of surety bond amounts. In the second quarter of 2020, multiple states enacted new legislation regarding surety bonds.
Commodity handlers and farm products
Colorado House Bill 1213 passed on June 29, 2020, and pertains to commodity handler and farming requirements in the state of Colorado. In the bill, the surety bond maximum amount is increased from $200,000 to $1 million. Along with the increased maximum bond amount, the bill introduces record-keeping, financial, and licensing regulations. The Commissioner of Agriculture oversees all requirements regarding this bill.
Motor vehicle sales
Enacted on July 2, 2020, Colorado Senate Bill 140 requires motor vehicle dealers to compensate customers in the event of fraud resulting from the actions of the dealer. Simply put, the bill allows people to recover financially from a bond should a hearing determine fraud was involved. Also, the bill reinforces the advantages of purchasing surety bonds: “The purpose of the bond procured by the applicant is to provide for the reimbursement of any loss or damage suffered by any retail consumer caused by fraud.” Therefore, surety bonds provide protection for consumers.
Georgia Senate Bill 462 became effective on June 30, 2020. The state of Georgia requires the licensing and bonding of any financial institutions, universities, or pawnbrokers offering installment loans. More specifically, the bond must be satisfactory to the Department of Banking and Finance and the amount of the bond must be $25,000, plus an additional $5,000 per office location. However, the bond amount cannot exceed $100,000.
Responsibility of timber buyers
On March 12, 2020, the Senate passed Iowa Bill 2250. The bill details the responsibilities of timber buyers in the state of Iowa. According to the bill, a timber buyer is defined as “a person engaged in buying timber for sawing into lumber, for processing, or resale.” Moreover, timber buyers must purchase a surety bond in an amount between $25,000 to $50,000. In addition to obtaining a bond, timber buyers are required to obtain a timber transport certificate.
Tobacco products tax
Kentucky House Bill 351 pertains to licensed wholesalers selling tobacco products. Passed on March 14, 2020, HB 351 allows for tobacco products retailers to submit a tax bond in lieu of paying taxes when registering for a business. However, The Department of Revenue must approve the surety.
Senate Bill 315 makes changes to agricultural laws in North Carolina. Passed on June 12, 2020, SB 315 has certain sections that will become effective on different dates. For instance, section 2a, which pertains to driving farm equipment, will become effective on December 1, 2020. Furthermore, the section that details soil and water confidentiality will become effective on October 1, 2020. In terms of surety bond requirements, the bill establishes the requirement for hemp handlers to obtain a bond of at least $250,000.
Enacted on April 22, 2020, Virginia Senate Bill 421 pertains to consumer lending. More specifically, the bill requires loan access partners and internet lenders to obtain a license and a surety bond issued in favor of the Commissioner of Virginia. The surety bond amount is between $50,000 and $500,000, and is determined by the Commission. Access partners must comply with the provisions stated in the bill. For example, some of the stipulations include conducting due diligence reviews, maintaining written agreements with all partners, and accepting responsibility on the occasion that any access partner violates the regulations.
West Virginia House Bill 4749 became effective on March 25, 2020. HB 4749 allows private investigators and security service providers, whether acting individually or as a firm, to choose between liability insurance or surety bonds. Should a company or an individual choose to purchase a surety bond, the amount of the surety bond is $5,000. Furthermore, the bond requires private investigators or security officers to carry out their duties faithfully and honestly.
How to become a private investigator in West Virginia
To obtain a license to operate as a private investigator in the state of West Virginia, applicants must be eligible to apply under the conditions stipulated in the bill. For example, applicants must adhere to the following requirements:
- Be 18 years of age
- Be a citizen of the United States or legally live in the United States
- Have relevant experience
- Be employed as a member of any United States government investigative agency
Additional eligibility, application, and licensing requirements can be found in HB 4749.
Proprietary school bonds
West Virginia House Bill 4077 passed on March 3, 2020, and became effective on June 1, 2020. Essentially, the bill increases the required surety bond amount for proprietary schools from $35,000 to between $50,000 and $100,000.
What is a proprietary school?
HB 4077 defines proprietary schools as “institutions of higher education.” Educational institutions must apply for a permit from the State College System Board. However, The Board’s approval is dependent upon whether or not the applicant has enough room for students, adequate supplies, and is ready for operation.
Any school operating in the state of West Virginia for 10 years or less is required to purchase a surety bond. However, this does not apply to schools that have changed ownership during the previous 10 years. The council determines the amount of the surety bond, and the Chancellor determines the form of the surety bond. As with most surety bond requirements, the school must guarantee they will act honestly and in compliance with the relevant rules and regulations of West Virginia.
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