A business or individual wishing to register with the Nevada Secretary of State as a Document Preparation Service provider is required to provide a $50,000 bond as part of the registration process. The bond requirement is continuous, i.e. the bond is required to be in place as long as the business/individual remains registered as a document preparer. The bond is annually renewable, meaning the bond is issued for an initial 1 year term then the bond must be renewed every successive year.
The NV document preparation services bond provides a form of protection for the document preparer’s clients. The bond provides an additional incentive for the document preparer to conduct business in an acceptable manner in accordance with applicable Nevada state regulations. The bond provides an additional path or recourse for a party damaged by a document preparer whose actions were in violation of Nevada state regulations. Generally speaking, a document preparer must provide the services to their client as agreed in contract. These services must be provided in a manner free from negligence, fraud and dishonesty.
If a document preparer acts or conducts business in a manner that violates state regulations and damages their client, the potential for a claim on the bond arises. When a claim is made on the bond, the surety will determine the validity of the claim. If the claim is found to be valid, the surety will be required to pay on the claim up to the penal sum of the bond, $50,000. The surety will attempt to recoup any losses incurred due to claim payouts from the principal, the document preparer. The document preparer is ultimately liable to the surety for any amount paid out by the surety to settle claims.
If the surety has to pay to settle a claim, there is a good chance the bond will be cancelled by the surety. Since the bond is a requirement for a business/individual to maintain their registration as a document preparation services provider, it is in the best interest of the document preparer to conduct business in a manner acceptable to state law to avoid claims on the bond.
The NV document preparation services bond is a type of license/permit bond. Applying for these bonds is typically a simple process consisting of completing a short application. In some cases, personal financial statements for the business owners may be required as well, but not regularly. A credit check of the business owners is performed as well. If additional information is required to obtain a quote, a bonding agent will let it be known.
The premium for a NV document preparation services bond is charged at an annual rate. The rate is typically quoted as both a dollar amount and as a percentage of the bond amount. There is no set rate for this type of bond. The quotes provided by the surety are based on the credit and/or financial standing of the principal as well as the surety's rate filings with the state. The typical range quoted for this bond type is from 1% to 3% of the bond amount. This is truly a general range and a bond quote can come in lower or higher than that range depending on credit and/or financial standing.
Rates for applicants with poor credit can come in higher than the general range. How much higher may be partially determined by the severity of the credit issues.
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