Author: Tammi Langlois

Alabama motor vehicle dealers need to be aware of a major change to the state’s surety bond requirement. New rules will affect how much dealers pay to secure and renew a bond they must have in order to legally sell vehicles. More importantly, the changes to the Alabama motor vehicle surety bond requirement will create greater liabilities for dealers should anyone ever file a claim against the bond. The experts at Viking Bond Service are here to show you exactly how these changes affect you, your business, and your surety bond. 

What is a Motor Vehicle Dealer Bond?

It’s worth reviewing how an Alabama motor vehicle surety bond works before describing the new requirements now in effect. Alabama – like all states – requires motor vehicle dealers to have a license in order to run their business legally. As part of the license requirements, dealers must obtain an Alabama motor vehicle surety bond. Failure to obtain a bond makes it impossible to receive a license. Likewise, dealers who let their bond lapse are at risk of losing their license as well. 

This type of surety bond – known as a license bond or commercial bond – holds a motor vehicle dealer accountable if he breaks Alabama state laws applicable to vehicle sales – selling a lemon, for example. Vehicle buyers wronged by a dealer may file a claim against the motor vehicle dealer bond seeking compensation equal to whatever they lost because of the dealer’s illegal behavior.

After receiving a claim, the surety company that issues the bond launches an investigation to determine whether the claim is true. If so, the surety automatically settles the claim in full – guaranteeing that anyone affected by an unlawful vehicle seller can get restitution. After paying, the surety will collect the amount of the claim plus interest and fees from the motor vehicle dealer. The bond agreement holds the principal (the bonded party, in this case the dealer) responsible for all valid claims. 

What are the new requirements of the state of Alabama motor vehicle dealer bond 

Previously, Alabama required all motor vehicle dealers to have a surety bond valued at $25,000 – meaning the surety company that backed the bond agreed to pay up to that amount to settle claims. Beginning October 2020, dealers will need a State of Alabama motor vehicle dealer bond valued at $50,000. Keep in mind that these are minimum amounts. The state assigns bonding requirements on a case by case basis and may require some dealers to have a larger bond. However, all dealers will need twice the bond they had before – which will have long-term implications for their finances we will discuss in the next section. 

How much will the Alabama motor vehicle surety bond cost?

The amount someone pays for a surety bond is a small fraction of the bond’s total value, starting at 1%. That means before the changes to the motor vehicle dealer bond requirement, a dealer paid as little as $250 to meet the state bond requirement. Now that the bond requirement has doubled, the premium has too. Dealers will pay at least $500 to obtain the necessary surety bond, and at least that amount to renew the bond on an annual basis. Exactly how much someone pays depends on their credit, background, and business standing. Premiums for these bonds could cost north of four figures. Dealers will need to plan for the added expense as part of their annual budget. They will also need to make extra effort to prevent any circumstances that could lead to a claim on the bond – which could be as much as $50,000 a dealer must pay back in addition to interest and fees. 

How to apply for an Alabama motor vehicle surety bond? 

ALL motor vehicle dealers in Alabama will need to apply for a new surety bond to comply with the state’s expanded bonding requirements – even if you have an active bond already. Since an active bond will not cover the amount now required by the state, everyone must seek out a larger bond than they currently have. To apply, dealers will need to complete a standard bond application, submit to a credit check, and supply any additional documentation the surety asks for. This is also an ideal time to explore whether a new bonding provider could offer more competitive rates or superior service. 

Viking Bond Service – Serving All of Alabama

If you’re someone who requires an Alabama motor vehicle dealer bond, you need to act fast to comply with the changes to state law. As a leading surety bond provider, Viking Bond Service is here to help. Speak to one of our bond experts at 1-888-278-7389 to ask questions, or submit them through the contact form on this page. Or get the bonding process started today. Fill out this online bond application, and expect a quote within 24 hours. 

In a handful of states, you must obtain a home inspector bond before the state agency responsible for regulating home inspectors will issue you a license. Obtaining a surety bond is just one of many steps you must complete before you’re permitted to legally inspect home – but it’s an important step nonetheless, and there could be serious consequences if you don’t treat the bond requirement seriously. In this blog, we will answer the questions, what is a home inspector bond and why do you need one?

What is a Home Inspector Bond?

A home inspector bond is a mechanism that states use to help regulate the home inspection industry. When a home inspector enters into a bond agreement, he or she agrees to take financial responsibility for any damages caused to a client (someone in need of home inspection services) because of unlawful or unethical behavior. If a client believes a home inspector hasn’t “followed the rules,” the client may file a claim against the home inspector bond seeking financial compensation. The surety company that issues the bond to the home inspector and backs the bond will then launch a thorough investigation. Provided that everything outlined in the claim proves to be true, the surety will pay the claim in full. Lastly, the surety will collect the amount of the claim plus interest and fees from the home inspector – the party that triggered the claim and the party that has the financial responsibility for the claim under the terms of the bond agreement. In the simplest terms possible, a home inspector bond is a way to protect home owners/buyers/agents and hold disreputable professionals responsible for their behavior. 

Who Needs a Home Inspector Bond?

At the time of writing, most states do not require a home inspector bond. That doesn’t mean home inspectors in those states don’t need a license, and in some cases they may need different types of surety bonds as well. However, only a limited number of states require a home inspector surety bond specifically. Those states include: Alabama, Arizona, Arkansas, Kansas, Kentucky, New Mexico, North Carolina, Ohio, Oregon, and Washington. If you’re unsure whether or not you need a home inspector bond, reach out to Viking Bond Service – a nationwide surety brokerage with a team of bond experts who can help you determine exactly what kinds of bond(s) you need and help you through the application and approval process. Rely on us to get it right so that your ambitions of becoming a home inspector don’t encounter unnecessary delays. 

When Do You Need a Home Inspector Bond?

In states where a surety bond requirement exists, the state will not grant you a home inspector license until you can prove you have an active bond in whatever amount the regulators require. You must continue to keep that bond active for as long as you work as a licensed home inspector. If the state discovers you don’t have a bond, it will revoke your license, making it impossible to inspect homes legally. Keeping a bond active throughout your career involves renewing the bond regularly – typically every 12 months or after however long the bond agreement specifies. During renewal, the surety company will reevaluate your credit and quote you an updated bond premium price based on any changes to your credit in the preceding months. Consequently, the premium price could go up or down (or stay the same) each time you renew. 

Why Do You Need a Home Inspector Bond?

Home inspections are a sensitive and important part of the real estate industry. People rely on home inspectors to give them an honest assessment of a property, and what a home inspector reveals (or doesn’t reveal) has serious consequences for all involved. States encourage home inspectors to provide upstanding services by requiring them to get a bond that will hold them responsible for trying to manipulate or exploit a client. In that way, bonds discourage negative behaviors, giving clients an added layer of confidence. Home inspector bonds also provide a way to hold unlawful inspectors accountable and ensure anyone wronged by their behavior has a way to seek justice in the form of financial compensation. 

How Do You Acquire a Home Inspector Surety Bond?

It’s a relatively simple process. You will need to complete a standard bond application – with information about your background, business, and financial standing – submit to a credit check, and turn over any additional documentation the surety company asks for. You will then get a quote for the bond price (ideally within 24 hours). How much you pay depends, primarily, on your credit score and financial history. People with bad credit will likely pay more, but not drastically more – and with the right surety bond provider, they won’t be denied for a bond. Pay the premium to activate the bond, after which the surety will provide documentation to prove to the state you have the required bond. 

Viking Bond Service – Home Inspector Bonds in All States

If you need a home inspector surety bond, we have everything you need. Get answers to your questions and more information about anything by calling us at 1-888-278-7389 or by using the contact form on this page. Or get the bonding process started today – take a few minutes to complete this online application and expect to get a quote back fast!

Before we dive into all the different reasons you may need a mortgage broker bond, let’s explain the definition. A mortgage broker bond is a specific type of license surety bond. This and all other types of surety bonds hold the bonded party (in this case the mortgage broker) financially responsible if he or she violates state laws governing the mortgage industry – eg. if a broker approves someone for a loan well beyond his means to repay. 

If and when a broker violates state law, the person who was seeking a home loan may file a claim against the mortgage broker bond seeking damages in the form of financial compensation. As long as the claim describing the damages holds up as true under investigation, the surety company that issues and backs the bond automatically settles the claim in full. At that point, the surety will use whatever legal means necessary to collect the amount of the settlement (plus interest and fees) from the mortgage broker – the person with financial responsibility for all claims under the terms of the bond agreement. 

Mortgage Broker Bonds: 5 Reasons you need them

Now that you understand the basics of how mortgage broker surety bonds work, explore all the different reasons you must obtain one if you plan to work as a mortgage broker:

1. State Laws – All 50 states require someone to have an active mortgage broker bond before they’re allowed to broker for home loans and at all points afterwards. There is no leeway around this requirement; bonds are mandatory for all mortgage brokers in all states. Every state requires this surety bond because it’s an effective way to regulate a sensitive industry and hold parties accountable when they disregard the law. 
2. Licensure Requirements – When you apply for a license to become a mortgage broker (required in all 50 states), you must submit documentation proving you have an active mortgage broker bond that meets the state’s requirements. The state will not approve you for a license without a bond, and they can revoke your license if they discover your bond has lapsed. For all professions, including mortgage brokers, that require the state’s blessing to work legally, keeping a license in good standing is among the highest business priorities. Therefore, having a mortgage broker surety bond is too. 
3. Stiff Penalties – If the state agency responsible for regulating mortgages catches a broker operating without a bond or without a license, there are penalties. Those can range from a small fine for a relatively minor misdeed, to a much larger fine. In the worst instances, the state may revoke someone’s mortgage broker license and their right to ever obtain a new license – effectively shutting them out of the mortgage broker industry in the state. Hopefully this illustrates the stakes for not following the rules and highlights the importance of having a mortgage mortgage broker bond at all times. 
4. Business Opportunities –  People put tremendous faith in their mortgage broker to facilitate the sale of a home – one of the most expensive and important purchases a person will ever make. They need to trust their broker completely to be honest and look out for their interests. Mortgage broker bonds help establish that trust. Since bonds hold brokers financially accountable for illegal behavior, they help to discourage that behavior. And by giving mortgage seekers a way to recoup any losses they suffer, a mortgage broker surety bond makes it feel less risky to rely on a broker. Some brokers highlight the fact that they’re fully bonded as a way to attract clients looking for an honest professional to work with. 
5. Industry Enrichment – Having a mortgage broker surety bond may be a requirement – and one with serious consequences if not followed – but the bond requirements that exist in all 50 states ultimately benefit all mortgage brokers and the home buying and lending industries as a whole. By holding manipulative and exploitative brokers accountable and keeping disreputable characters out of the mortgage industry, surety bonds uphold the character of the industry as a whole. They help people feel confident taking out mortgages and ensure the home lending system proceeds without unnecessary disruptions. The extent to which mortgage broker surety bonds enrich the industry exceeds the cost of the bond itself. Most seasoned brokers are glad the bond requirement exists. 

Viking Bond Service – A Partner to Mortgage Brokers Everywhere

For something as important to your career as a mortgage broker surety bond, you need the right surety bond partner. Brokers nationwide work with Viking Bond Service because we meet all their needs as efficiently and affordably as possible. As a leading surety bond provider, we can issue the exact bond you need in all 50 states, and make the process easy from beginning to end. Unlike many other surety bond providers, we serve applicants who have bad credit. Get more information about your bond by calling us at 1-888-278-7389 or by sending your questions through the contact form on this page. You can also get the bonding process started now. Complete this online application, and expect to get a quote for a mortgage broker bond within 24 hours!