Surety Bond Blog » new york

Surety Bond Claims: Communication Is Key

Eric Weisbrot — Thu, 20 Oct 2011 17:58:46 +0000

The surety bond industry is a quirky one. Should you already have bonds or foresee needing bonding in the future, it’s important to have good communication with your surety company. Poor communication can bring about avoidable lawsuits just like it did for a couple of condominium complexes in New York City.

Two privately owned condominiums, East 49th St. Dev. II, LLC, located at East 49th Street, NYC and 250 East Borrower, LLC, located at 250 East Borrower, NYC hired a contractor by the name of Prestige Air & Design, LLC to perform HVAC work in the buildings. Prestige Air & Design was required to obtain a payment bond and a performance bond coming to a sum of $2,085,000 in order to guarantee the project. East 49th Street claims that Prestige Air & Design did not satisfy the contract due to negligently installed drains, joints, and pipes. A letter was sent by 250 East Borrower to Prestige Air & Design, LLC and stated that they had not fulfilled the construction contract and if, not corrected, measures would be taken to complete the work another way; but the letter was addressed to Prestige and was not sent to First Sealord Surety, Inc., the surety who wrote the bonds.

Once the condominium complexes and the surety were on the same page, First Sealord requested that East 49th Street send the “Proof of Claim Bond Obligee Affidavit” and all documentation supporting their claim. First Sealord stated that failure to provide documentation for the claim investigation may result in the claim being denied. The claim was indeed denied as a result of East 49th Street failing to include the contact information, project name, bond number or any documentation supporting its claim for completion. In the end, the case was dismissed against First Sealord.

Dealing with construction contracts and especially bonds of this size, it’s important to keep open communication with the surety company who wrote the bonds. There is a very specific process for the investigation of bond claims and if that process is not followed, it can result in a claim denial and cause unnecessary and costly litigation.

New York Combative Sports Bond

Eric Weisbrot — Wed, 12 Oct 2011 19:33:02 +0000

New York legislators have implemented a new bill concerning combative sports. The new bill, which is titled SB 2811, requires individuals conducting combative sports matches to acquire a surety bond to guarantee that they follow state regulations. The specific bond amount is not yet established.

New York Mortgage Broker Bond

Eric Weisbrot — Sun, 21 Aug 2011 15:25:04 +0000

New York legislators have re-adopted regulations to implement AB 6924 (2009). The New York Banking Department now requires mortgage loan originators to obtain a surety bond. Should the originator be an employee or exclusive agent of an originating entity subject to the present surety bond requirements, then the employer’s bond could be utilized to meet the requirement. The current law requires mortgage brokers to obtain a bond ranging from $10,000 to $100,000 calculated by loan application volume; under the new bill they must acquire a bond ranging from $50,000 to $500,000, which is calculated by the volume of New York closed loans. AB 6924 states that the Superintendent has the ability to require a larger bond if the “nature or business of a [mortgage loan originator] or originating entity requires in the reasonable judgment of the Superintendent such additional protection for consumers.”