There is a new surety bond option for Arizona contractors. A new law titled SB 1284 offers the use of arbitration for construction contractors settling disputes when the amount of disputed repairs are less than $5,000. SB 1284 states that the contractor has the option of obtaining a surety bond equal to the claim. Should a contractor go with the bond, it will prevent the suspension of their license.
Arizona State legislators recently made modifications to the state’s court bond requirements; specifically concerning appeal bonds. The new bill is named SB 1212 and modifies the cap on an appeal bond that’s required to stay the execution of a judgment in civil actions. The previous legislation required a surety bond equivalent to the full quantity of the judgment including charges, interest and any damages relating to the appeal. SB 1212 requires the bond to be equal the total quantity of damages awarded excluding punitive damages, $25 million or 50% of the appellant’s net worth, whichever is less.
The State of Arizona enacted new legislation relating to real property appraisal management companies. The new law, which is referred to as SB 1351, requires real property appraisal management companies to become registered and acquire a $20,000 surety bond. When SB 1351 was originally introduced, the surety bond quantity was $50,000.
On 02/04/2009, a new law was introduced pertaining to Arizonian mortgage brokers. HB 2486 now has commercial mortgage brokers abiding by existing law which regulates residential mortgage brokers. HB 2486 requires licensure as well as a surety bond, which is conditioned on fulfillment of the law. The quantity of the surety bond is calculated by the brokerage’s class of investors. Should the investors be solely institutional investors, the surety bond must be $10,000; if not the bond must be in the amount of $15,000 if some of the investors are non-institutional.
Arizona state has written a new bill relating to new mortgage originator requirements. The new bill, HB 2143, requires mortgage originators to be employed by a mortgage banker, mortgage broker or consumer lender and must also be covered by a surety bond obtained by their employer. The originators are subject to licensure following present law.
HB 2143 also produces a recovery fund. The recovery fund will be supported by fees determined by the Superintendent of Banking for mortgage originators attaining their original license; and fees before license renewal with any year in which there is less than $2 million in the fund. The recovery fund pays for direct out-of-pocket damages, including reasonable attorneys’ fees and litigation costs. A $200,000 per claim limit is set against the fund, plus a $500,000 aggregate limit for any claims against an individual licensee. The superintendent is permitted to appeal the court to prorate all claims against a licensee. If the recovery fund has inadequate funds to pay claims against it, the superintendant can wait until satisfactory funds have been deposited and fulfill due claims, or portions thereof, in the order received, plus interest of 4% per year.
When originally written, the bill demanded that loan originators submit their employer’s surety bond and pay $100 to the recovery fund in order to acquire their license. The SFAA asked the AIA to amend the bill to illuminate the issue of whether the surety bond or the recovery fund responded first if a claim were to arise against a loan originator. The modification that the SFAA drafted asks the bonds required from mortgage brokers and bankers to be exhausted before a claim is made against the recovery fund. The AIA was victorious in having those requirements incorporated into the bill before it was accepted by the Senate and went back to the Houses for agreement. There were additional final changes to HB 2143; with existing law, mortgage brokers must obtain a $10,000 surety bond, with the bond amount varying from $25,000 to $100,000 which is based on the total assets and unpaid loan balances. HB 2143 also raised the amount of the employer’s surety bond to a minimum of $200,000. The new law includes new requirements for bonding and payments to the recovery fund. Originators are asked to submit their employer’s bond in order to acquire a license, while at the same time allows the originator to pay the quantity that the superintendant directs into the recovery fund or post the employer’s surety bond. HB 2143 also states that if an originator is functioning under the employer’s bond, the originator doesn’t have to pay into the recovery fund. If the employer opts to obtain the smaller license bond amount required for the employer’s licensure, then any of its employees that are licensed as originators will have to pay assessments into the recovery fund. Alternatively, the employer may obtain its own license bond and then pay the required recovery fund assessment on behalf of all its licensed originators to abide by the license requirements. Should the employer choose to post the upper minimum bond amount, which is at least $200,000, to protect all the loan originators it employs, ten of the originators will not have to pay into the recovery fund.
SB1289, enacted on April 28, 2008 and made effective October 10, 2008, created flood protection districts and a Board of Directors for each district to construct flood protection facilities. The new law states that performance and payment bonds are required for any construction, and clarifies the process for claims against the performance and payment bonds. The surety has 60 days to act upon a contractor found to be in default by the board or the board may re-let the contract. If the costs to complete the project surpass the finances available for payment, the defaulting contractorâ€™s surety has 20 days after mailing of the notice to satisfy the boardâ€™s demand for payment of the difference. This demand cannot be more then the penal sum of the bond, and monies must be used to pay for the costs of completing the work. Delivery of writ may be served on the Suretyâ€™s principal office or itâ€™s Attorney-In-Fact. If there is no office or Attorney-In-Fact, it may be service on the insurance commissioner.