Real Estate Broker Bonds
Real estate broker bonds provide protection for the state and its citizens. The surety bond ensures the bonded real estate broker will faithfully and truthfully represent each property and the money they manage in a real estate transaction. The bond provides a financial incentive for the bonded party to abide by the laws and regulations governing their duties. Real estate bonds also create a mechanism for redress if the bonded broker makes fraudulent claims to try to make a sale or misuses the funds entrusted to them.
What is a Real Estate Broker Bond?
A real estate broker bond is a type of surety bond that guarantees that a real estate broker and their agents will abide by all pertinent laws and regulations. A real estate sale typically involves more money than any other transaction most people participate in. The real estate bond protects buyers, sellers, and the state from potential fraud, abuse, or misconduct by brokers and their agents.
How Does a Bond for a Licensed Real Estate Broker Work?
A real estate broker bond involves three essential parties:
- The Obligee - The obligee is the state that requires a real estate bond.
- The Principal - The real estate broker who secures the bond is the bond principal.
- The Surety - The insurance company that underwrites a real estate bond is the bond surety.
If someone alleges misconduct on the part of a real estate agent, they can file a claim against the bond. The surety will then conduct a thorough investigation of the claim. If they find in favor of the claimant, they will promptly pay the claim up to the bond's full value and then seek repayment from the principal. However, if they determine the broker or agent did nothing wrong, the surety will dismiss the claim.
Who Needs a Real Estate Broker Bond?
Many states require a real estate broker bond from anyone who wishes to be licensed as a broker. It clearly demonstrates the dedication to abide by all laws and regulations while handling all transactions in an ethical manner. Typically, a state's Real Estate Commission or the Department of Consumer and Business Services determines the type and value of the bond required for real estate brokers.
How Much Does a Real Estate Broker Bond Cost?
The real estate broker bond cost is a small fraction of the bond's value. Typically, the cost comes to a 1% - 5% premium. The bond amount is set by the state in which you do business. Then, the surety company sets the premium based on your credit rating. The better your credit, the lower the premium you will be asked to pay for the bond.
How Can I Get a Real Estate Broker Bond?
At Viking Bond Service, we make obtaining a surety bond easy. Complete our online bond application, and we will get you a competitive real estate broker bond quote ASAP. Or, feel free to contact us online or by phone at 1-888-2-SURETY (1-888-278-7389). Our bond specialists look forward to assisting you with any questions.
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