Commercial real estate is affected by new surety legislation in North Carolina. The new law is named HB 174 and implements measures for filing liens on commercial real estate which allows a surety bond equivalent to 125% of the amount of the lien claim to be used to release the lien. HB 174 became effective October 1, 2011.
SB 18 is a new law that was introduced in 2009 affecting North Carolina cemeteries; the law repealed the pre-need funeral surety bond. This law originated from the insolvencies of two cemeteries. The surety company was prepared to pay the claims of the individuals whose contracts were not fulfilled, but the quality of the cemeteries’ records did not suffice. The Cemetery Commission also understood that the surety bond was a forfeiture bond and that the surety had to submit the whole penal sum of the bond to the state regulators, who would then pay the claims. The court concluded that the surety on the bond had no legal responsibility. The cemetery had altered its ownership and corporate name while the name of the cemetery on the surety bond was never modified.
While SB 18 initially repealed the bond requirement, the law was amended in the Senate to grandfather operating cemeteries that had surety bonds, but asked new licensees to set up a trust fund. The SFAA and AIA addressed this law last year so that when it passed the Senate, the provision to revoke the bond had been canceled. SB 18 was heard and a consumer group was fruitless in modifying the law so that the surety would have to certify yearly that it would take responsibility for claims as they occurred. The new law was enacted without any surety bond repeal.
Members of the Alcoholic Beverage Control Commission (ABC) in the State of North Carolina must follow a new law that was recently enacted. The new law is labeled HB 1717 and amplifies the quantity of the required surety bond for both the local board members of the Commission and the local store administrators from $5,000 to $50,000. The new law would have initially boosted the required surety bond quantity up to $100,000 but the law was modified.
The executive director of the Board of Nursing is affected by a new law in North Carolina. The new law, which is titled SB 356, terminates the surety bond requirement for the executive director of the Board of Nursing. The law regarding the particulars of the bond, which still is referenced in present law, was canceled in 1981. SB 356 was enacted on June 19th, 2009.
North Carolina introduced a new law affecting mortgage loan originators. The new law is named HB 1523 and requires each mortgage loan originator to be covered by a surety bond through employment with a licensed mortgage lender, broker or servicer. The bare minimum surety bond amount for mortgage brokers is $75,000. Should the quantity of loans originated be over $10 million, but less than $50 million, the surety bond quantity must be $125,000. Total loans originated in excess of $50 million in North Carolina in a 12-month time period require a surety bond that is no less than $250,000.
The minimum surety bond quantity required of mortgage lenders is $150,000. Should the quantity of loans originated be in excess of $10 million, but no more than $50 million, the surety bond amount must be $250,000; total loans originated in excess of $50 million in North Carolina requires a surety bond in a minimum amount of $500,000. HB 1523 states that the lender, broker or servicer’s surety bond must guarantee all the originators that the licensee hired and the bond amount will be calculated by the quantity of loans that the mortgage lender or broker originated in North Carolina in a years time. The previous law required mortgage lenders and brokers to acquire a surety bond in the amount of $25,000.
The SFAA modified the AIA in this legislation and were able to influence the bill sponsor to divide broker bond amounts from lender/servicer bond amounts. The surety bond amounts for brokers were sliced in half before the bill was accepted at the House. The surety bond quantities for lenders and servicers were not altered. The SFAA continued to cooperate with the AIA in the Senate to get the bond amounts decreased. The Senate felt that the bond amounts had already been dealt with. No other opposition was felt from any other concerned party on the surety bond amounts.
Another amendment was added to address persons (natural persons) who presently are licensed as a mortgage originator and would be covered by their employer’s surety bond. If such a “natural person” now requests a mortgage broker’s license and they are not an employee of a mortgage broker/lender, they may be licensed as an “exclusive mortgage broker.” Such individuals can proceed as an agent for only a single lender or broker. They only have the option of selling fixed term mortgages with considerably equivalent monthly payments; they either have to satisfy the new bond quantity required of mortgage brokers or they have to be covered by a surety bond provided by the lender/ broker for whom they are an exclusive mortgage broker. The surety bond amount must be $5 million or an amount equivalent to the sum of the surety bond amounts of all the exclusive mortgage brokers that the lender or broker supervises, whichever is less.
North Carolina implemented a new bill affecting state maintained streets and the homeowners association within the state. The new bill is named HB 182 and provides for the installation of traffic calming devices on State maintained roads in subdivisions with a homeowners association and districts where all property owners have instituted a contract for traffic tables or calming devices installed in the neighborhood. HB 182 requires the homeowners association or the district/neighborhood to acquire a performance bond with the Department of Transportation that is adequate to fund the maintenance or elimination of the traffic tables and calming devices, if the homeowners association, or district failed to preserve them. The surety bond must be active for three years from the time of installation of the devices or tables.