North Dakota Surety Bonds

A North Dakota surety bond is a legally-enforceable, three-party contract ensuring that a business or individual adheres to relevant North Dakota statutes, administrative regulations, and contractual requirements. These bonds are mandated as a prerequisite for licensing, permitting, court proceedings, or participation in certain public and private ventures.

Instead of operating as insurance for the bondholder, a North Dakota surety bond serves as a financial safeguard for the party requiring it. Should the bonded party fail to comply with the law or meet their duties, the bond offers a means for financial recovery for those who have suffered losses.

Every North Dakota surety bond involves these parties:

• Principal – The individual or business obligated to secure the bond. The principal is responsible for adhering to all applicable laws and regulations and is financially accountable for any legitimate claims paid out by the surety.
• Obligee – The government entity, court, municipality, or project owner that necessitates the bond. The obligee determines the bond amount, bond conditions, and form requirements based on applicable laws and regulations.
• Surety – A licensed surety provider that underwrites and issues the bond. The surety guarantees the principal's obligations and investigates all claims made against the bond to ascertain their validity.

What is the Purpose of a Surety Bond?

A surety bond offers a financial assurance that you will fulfill your legal and contractual obligations. Should you fail to complete a project, violate licensing rules, or default on an agreement, the bond safeguards your clients or the government by covering resulting financial losses.

For instance, a sales tax bond ensures the state receives payment if you neglect to remit taxes. Fidelity bonds are the exception; they protect you or your clients from losses caused by dishonest employees, such as theft, embezzlement, or forgery.

Grasping how surety bonds work is vital, as you are ultimately required to repay any claims that are paid out. Our guide to getting bonded in North Dakota can assist you in navigating the process and determining the correct bond for your business.

The obligee (the agency, court, or organization requiring the bond) is the best source for the precise North Dakota surety bond form you require. However, if you are at an early stage of the application process and haven't yet received any forms, starting with an understanding of the three primary categories of surety bonds is advisable.

• License and permit bonds - These are necessary for many professionals and businesses to legally operate. Auto dealer bonds, mortgage broker bonds, and notary bonds are typical examples.
• Contractor bonds - These are mandatory for contractors engaged in public construction projects. This category includes bid bonds, performance bonds, and payment bonds.
• Court bonds - These are mandated by North Dakota courts for proceedings like probate, appeals, guardianships, and fiduciary appointments.

If you are uncertain about the appropriate bond type for your circumstances, you can utilize our find your bond tool or contact one of our surety bond experts.

Most Common Surety Bonds in North Dakota

• North Dakota Auto Dealer Bond ($25,000) – Required for all new and used motor vehicle dealers licensed by the North Dakota Department of Transportation. Licenses expire December 31 each year and must be renewed annually.
• North Dakota Contractor License Bond ($2,000–$15,000) – Required for water well contractors licensed by the Board of Water Well Contractors ($15,000). The City of Grand Forks requires bonds for building, mechanical, plumbing, moving, sign hanger, and excavator contractors ($5,000).
• North Dakota Mortgage Broker Bond ($25,000–$100,000) – Required for mortgage brokers and lenders licensed through the North Dakota Department of Financial Institutions via NMLS. Bond amount varies based on loan origination volume.
• Freight Broker Bond (BMC-84) ($75,000) – Required by the Federal Motor Carrier Safety Administration (FMCSA) for property brokers operating in or from North Dakota.
• North Dakota Court Bonds (Amount Varies) – Required by North Dakota courts for appeals, guardianships, probate matters, and fiduciary appointments.
• North Dakota Notary Bond ($7,500) – Required for notaries public commissioned by the North Dakota Secretary of State.

Obtaining a North Dakota surety bond is a simple, step-by-step procedure that can frequently be finished fast if you possess all the required details and paperwork. The procedure is comparable for various bond types—whether it's a license, contractor, or court bond—but adheres to the same fundamental steps:

1. Identify the Bond You Need

Start by determining the exact surety bond required for your business, licensing, or court needs.

If clarification is necessary, reach out to the obligee (the state agency, city, or court) to get the correct bond form and the necessary amount.

Typical bond categories include:

• License and permit bonds – Examples cover bonds for auto dealers, contractor licenses, notaries, or insurance brokers.
• Contractor bonds – Such as payment, performance, or city-mandated license bonds.
• Court bonds – For example, probate bonds, appeal bonds, or guardianship bonds.

2. Complete a Bond Application

Apply for your bond with a surety company licensed in North Dakota. You'll need to provide information about yourself, your business, the required bond type, and the desired bond amount. Since the underwriting process depends on this information to determine your eligibility, precision is essential.

3. Underwriting and Risk Assessment

The surety company evaluates your financial and credit history to determine the level of risk.

They may request:

• Credit reports
• Personal or business financial statements
• Tax returns (for higher-value bonds)

Most license and permit bonds are approved quickly, even with slight credit issues. Contract bonds or court bonds typically require more time due to a deeper risk assessment.

4. Receive a Quote and Sign an Indemnity Agreement

Once the underwriting process is complete, the surety will provide a bond quote, detailing the premium necessary to obtain the bond. You will also sign an indemnity agreement, which legally binds you to repay the surety if a claim is filed and subsequently paid out.

5. Pay the Bond Premium

Bond premiums usually range from 1% to 10% of the total bond amount. This percentage is determined by the risk evaluation and the particular bond type.

Payment methods typically include online transactions, credit card payments, or checks.

6. Obtain the Bond Form

After the premium is paid and the bond is approved, the surety will officially issue the bond form.

The bond will be delivered to:

• You (the principal)
• The obligee (state agency, city, or court)

Surety companies in North Dakota typically require a credit report and financial information to issue a surety bond. This process allows them to evaluate your eligibility and confirm your ability to manage the bond's responsibilities, including covering any potential claims.

How Long Does It Take to Get a Surety Bond in North Dakota?

Partnering with a seasoned surety company like JW Surety Bonds ensures a fast and simple bonding process. Most license and permit bonds can be issued the same day your application is finished.

Working with an experienced surety company makes bonding a swift and easy process, often completed within a day or two. Larger bonds, as well as performance and payment bonds, may require more time due to extra underwriting and financial review requirements.

How Long Does a Surety Bond Last?

North Dakota surety bonds are issued in two forms: term (renewable) or continuous.

• Renewable bonds are effective for a set duration, typically 1 to 4 years, and require a manual renewal before the expiration date to maintain validity.
• Continuous bonds remain active without a set end date, automatically renewing annually unless terminated by the principal, the surety, or the obligee.

The bond documentation explicitly details all bond terms, expiration dates, renewal requirements, and cancellation provisions.

The bond premium, which is the cost of a North Dakota surety bond, is determined by two main factors:

• The bond amount mandated by the state, city, court, or licensing authority.
• Your financial risk profile, which the surety assesses during the underwriting process.

Surety bonds are priced as a percentage of the total bond amount. The majority of North Dakota surety bonds typically range from 1% to 15% of the required bond amount.

• For instance: A $10,000 bond for an applicant with low risk might cost between $100 and $300. A $50,000 bond for the same applicant will incur a higher premium due to the increased bond amount.

Premium rates are influenced by factors such as credit history, business experience, financial strength, and the specific bond type. This percentage-based pricing structure enables applicants to estimate their probable cost and plan ahead before submitting an application.

You can utilize our bond premium calculator to get an instant estimate. If you require a firm surety bond quote, you can apply to get an online approval.

It is possible to secure surety bonds with bad credit in North Dakota, although this depends on the specific bond type required and the severity of your credit problems.

Most license and permit bonds remain available to applicants with imperfect credit, as these generally pose lower risk and require simpler underwriting. Court bonds may also be obtainable despite credit challenges, though approval hinges on the bond amount and the nature of the financial issues.

Contract bonds present a greater hurdle for those with poor credit due to the higher financial risk involved. Applicants with minor credit issues might still qualify, but they are typically restricted to smaller projects and lower bond amounts. For applicants facing significant credit problems, such as major collections, liens, or civil judgments, approval is usually very difficult unless the contractor can provide strong business financial statements prepared by a CPA.

North Dakota surety bonds are required by a wide range of regulatory bodies, including:

• North Dakota Department of Transportation – Motor vehicle dealer licensing and auto dealer bonds.
• North Dakota Department of Financial Institutions – Mortgage broker and lender licensing and bonds.
• North Dakota Board of Water Well Contractors – Water well contractor licensing and $15,000 bonds.
• North Dakota Secretary of State – Business registrations and notary commissions.
• North Dakota State Electrical Board – Electrical contractor licensing.
• North Dakota State Plumbing Board – Plumbing contractor licensing.
• City of Grand Forks – Municipal contractor licensing and permit bonds.

Because requirements differ by authority, it's important to obtain the exact bond form and amount specified by the obligee to avoid delays or rejection.

When getting a North Dakota surety bond, choosing the right provider makes the process faster, easier, and more reliable. JW Surety Bonds stands out for:

• Licensed and Trusted – Fully authorized to issue all North Dakota bonds, backed by financially strong and highly rated sureties.
• Fast, Expert Service – Same-day quotes and bond issuance for most license and permit bonds, with instant online approvals available.
• Customer Support You Can Count On – Expert guidance through applications, renewals, and claims from our dedicated team of surety professionals.
• Competitive Pricing – Transparent premiums based on your bond amount and risk profile, with special programs for applicants with credit challenges.

With JW Surety Bonds, you get the right bond quickly, accurately, and confidently.

How much does a North Dakota surety bond cost?

The cost of a North Dakota surety bond generally falls within 1% to 10% of the total required bond amount. Your specific rate is determined by your personal credit score, financial history, and the specific bond type. To illustrate, an auto dealer bond of $25,000 could cost between $250 and $2,500 each year. Those with excellent credit are typically eligible for the most favorable rates.

What is the North Dakota auto dealer bond amount?

To meet state licensing requirements set by the North Dakota Department of Transportation, all North Dakota motor vehicle dealers, whether new or used, are required to secure a $25,000 surety bond. Both the license and bond are subject to expiration on December 31st each year and must be renewed annually.

Do North Dakota contractors need a statewide license bond?

In North Dakota, only water well contractors must have a statewide license and bond, which requires a $15,000 bond through the Board of Water Well Contractors. While general contractors do not need state licenses, they may be subject to local permit and bonding requirements. For example, the City of Grand Forks mandates bonds for certain contractor classifications.

What happens if a claim is filed against my North Dakota bond?

If a claim is made, the surety company will investigate its legitimacy. Should the claim be deemed valid, the surety will compensate the claimant up to the full bond amount. As the principal, you are then legally required to repay the surety for the entire amount paid, in addition to any legal costs incurred throughout the claims process.

Can I get a North Dakota surety bond with bad credit?

Even with credit challenges, approval for most license and permit bonds is common. While your premium rate might be higher due to your credit profile, approval can still be secured via specialized underwriting programs. JW Surety Bonds has access to exclusive markets, enabling us to approve bonds where other agencies might fail.