How to Verify a Surety Bond

surety bond - How can you verify a surety bond

How can you verify a surety bond?

An applicant has to show the following documents when applying for a surety bond in order that it can be verified. The application form must have been filled out and signed by all parties concerned, such as guarantors, principals, and the bonding company.

The other document which an applicant should present is the proposed contract of employment between them and their clients. Certified copies of trade licenses, tax clearance certificates, and identification cards are other documents that applicants need to submit before they can receive or sign a surety bond. If any party fails to present required papers during procedures then the bonding company cannot work on this transaction until all problems have been solved. 

Can you verify a surety bond?

Yes, a surety bond can be verified. The first step is to determine the proof of loss as there are different forms for life, casualty, and property bonds. In particular, proof of loss should indicate if it is an individual or commercial bond. Verification would then entail contacting the insurer to find out if they have a copy of the policy being referenced by the proof of loss form.

Usually, a surety company will require two documents before issuing a cash bond: 1) A deposit slip–completed by a bank showing how much money has been deposited into your account; 2) An application form listing where the bond money came from or who paid for it (i.e., client). You don’t need to buy another bond from the same surety company to get a cash bond. Many companies will issue a cash bond if you have an established record with them or if you can show they know who you are and that you’ve been in business for a significant period of time.

A surety bond can be verified by contacting the insurer. If it is a life, casualty, or property bond, the proof of loss form should indicate this type of insurance. Verification would then entail contacting the insurer to find out if they have a copy of the policy being referenced by the proof of loss form.

What is proof of surety?

Proof of surety is a legal document that has been adapted from the common law concept of sureties for bail. It contains a strict set of rules and procedures which must be followed to be considered valid by a court of law. 

A sureties contract is an agreement where two or more parties agree to jointly and severally take responsibility for the debts, defaults, omissions, taxes, penalties, or other liabilities owed by another party. In this case, if one party fails to pay their taxes because they cannot afford it, both parties will have to pay for the tax debt because they agreed to do so when signing their name on the proof of surety form created during the court proceedings.

There are different types of sureties for bail which are referred to as suretyship. If the title is not explicitly mentioned, then it may be assumed that a common law concept of surety is being discussed. 

What is the responsibility of a surety?

A surety is a person that undertakes to be responsible for the debt or performance of another under a reciprocal obligation.

To relieve anyone from his engagement, there must be a consideration moving from the party injured; as an engagement to pay money or do service at a future time, or granting time when it is demanded, are all acts of kindness, and no right accrued to him who receives, by any such act of grace on the other side. 

It follows then upon the foot of natural equity that if one man willingly engages himself for another, he ought faithfully to perform what he has undertaken. For here, three things concur: first, there is something due on account of what was done; next, there is something performed by one party; and then that the other part should be excused, for all or nothing is to be discharged by such engagements.

What are the ways you can verify a surety?

A surety bond is a promise by the guarantor (the person who gives the bond) to pay if you fail to fulfill your part of an agreement. There are three ways that the surety may choose to verify this:

1.) Payment Bond- requiring payments from both parties to be kept in an account which can be verified by the surety at any time;

2.) Performance Bond- where money does not change hands between parties, but rather goods or services produced by one party are verified as satisfactory by another party; and 

3.) Guarantee Letter- written proof that a third party has offered their own guarantee on completion of the contract.

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