After the melt down in real estate that arguably caused the great recession, a cadre of states have put surety bond requirement as part of the license requirements for real estate appraisal management companies. These companies are basically wholesalers, where for a fee, appraisal companies can obtain appraisal work. Seeing the value of pre-qualification offered by the surety companies, many more states are considering adding this invaluable surety bond requirement.
Connecticut HB 5637 is a placeholder bill that would require real estate appraisal management companies to post a $1 million bond payable to the Department of Consumer Protection. The bond would be for the reimbursement of certified or licensed appraisers for services they have rendered to the company, but for which they have not been paid. SFAA has contacted the bill sponsor regarding the high bond amount.
Massachusetts HB 992 would require real estate appraisal management companies to be licensed and post a $20,000 surety bond that accrues to the State for the benefit of a claimant against the company. The bond would secure the company’s faithful performance of its obligations under the proposed law. The bill would permit direct actions on the bond, but it also provides that the surety’s aggregate liability would not exceed the principal sum of the bond.
outh Carolina SB 349 would require real estate appraisal management companies to be registered and post a surety bond in an amount not to exceed $25,000. The bond would have to be from a corporate surety licensed to do business in the State. The Real Estate Appraiser’s Board, which the bill would create, would determine the bond amount through rules. The bond would secure the payment of any penalties and any damages incurred as a result of the company’s violation of the applicable law or rules. Other forms of security would be accepted in lieu of the bond.
West Virginia SB 346 would require persons or firms offering real estate appraisal management services to post a surety bond in an amount not to exceed $500,000. The bond amount required would be determined through regulations. The bond would run to the State for the benefit of any claimant against the registrant to secure the faithful performance of the registrant’s obligations.
There are many surety companies willing to underwrite real estate appraisal management companies. With good credit, the bonds can be obtained at rates as low as 1% of the bond amount.