Surety Bond News

In Kansas, new legislation was written relating to mortgage brokers. The new law is labeled SB 240 and requires the banking commissioner to promulgate the surety bond quantity required of mortgage brokers, which must be no less than the existing $50,000 bond if the broker preserves an office in Kansas. The surety bond may not be less than $100,000 if there is not an office preserved in the State. The present law authorizes termination of the surety bond with 30 days warning, and the new law now identifies that such cancelation would not influence the surety’s liability for infringements of the Kansas Mortgage Business Act that arose before the effective date of termination. Additionally, SB 240 states that the surety bond principal and the surety “shall be and remain liable for a time frame of two years from the date of any action or inaction of principal that gives rise to a claim under the bond.”

HB 2260 is a new bill that was activated in the state of Kansas affecting home inspectors. HB 2260 provides new stipulations for the surety bond required under present law for home inspectors, which must be at least $10,000. The new bill states that the surety bond must be from a State authorized corporate surety, and the surety bond must present its effective date and expiration date. Additionally, the new bill states that the surety bond will be conditioned on the inspector’s truthful work procedures and compliance with the regulations of all contracts into which they enter. As a final point, the law provides that despite of the amount of claims made against the surety bond or the number of years it remains in force, the collective/aggregate liability of the surety will in no event surpass the amount of the surety bond.

New legislation in the state of Kansas is affecting public adjusters in the state. The new bill, which is titled HB 2214, obliges public adjusters to be licensed and to present substantiation of financial accountability. A surety bond in a quantity that the Insurance Commissioner concludes to be appropriate can be used to satisfy the financial responsibility requirements. The surety bond must permit recovery by the Insurance Commissioner on behalf of any individual in the State who received damages ensuing from the erroneous acts, failure to act, conviction of fraud or conviction of unjust practices of the public adjuster. In place of the surety bond, an irrevocable letter of credit (ILOC) may be submitted. HB 2214 is based on the National Association of Insurance Commissioners’ model act.

A new law titled HB 2771 was enacted regarding new miscellaneous bond requirements. HB 2771, enacted in the state of Kansas, requires negligent employers to post a surety bond, deposit cash or securities when the employer neglects to file the reports demanded in relation to certain benefits contributions or for a delinquency in payments. The SFAA supposes that the surety bond generates adverse selection not in favor of the surety since it only is required of delinquent employers.

Home inspectors in the state of Kansas must not follow new regulations in Kansas after a new law was enacted. HB 2315, the new law, demands home inspectors to register with the Home Inspectors Registration Board. Also, the inspectors must provide evidence of financial responsibility which can be in the form of a surety bond. The surety bond can not be in less than $10,000 and may not be cancelled without 30 days prior written notice to the board. An errors and omissions insurance policy in an amount no less than $10,000 also will be accepted in the place of the bond. When the bill was introduced it also called for a separate fidelity bond requirement to protect from dishonesty in an amount of no less than $10,000, but this requirement was terminated in the senate. HB 2315 became active upon enactment.