What is an Appeal Bond?

appeal bondsAn appeal bond is a court surety bond utilized to protect the opposing party in a civil appeal case.  The precise rules for appeal bonds will vary from state to state, jurisdiction, or State vs. Federal Court.

The term “appeal bond” is often incorrectly utilized interchangeably with the term “supersedeas bond“.

An Appeal Bond is a surety bond that covers the opposing party’s court costs if the appeal was not successful.  Damages are usually limited to court costs such as filing costs, transcripts and other incidental costs. Attorney’s fees are usually not covered.

 

Why is posting an Appeal Bond important?

It helps dissuade frivolous appeals. There must be plausible grounds for filing an appeal; filing appeals that lack some or all of the substantive legal elements can pose significant professional consequences for both appellants and their attorneys. An Appeal Bond must be given due consideration early on in the litigation and treated like other serious risks throughout the handling of the case. Failing to do so can result in undesirable outcomes down the litigation road.

Appeal bonds ensure that appellees submit to the orders, judgment, and process of the ruling court and will not leave the geographical jurisdiction of the courts without its written permission. Furthermore, this type of court bond virtually promises a smooth and quick collection of the judgment proceeds soon after the ruling court affirms it.

 

How does the Appeal Bond work?

The party that is seeking to appeal a judgment (appellant) will need to obtain a surety bond to cover the amount of the judgment as well as any costs that are associated with the appeal. In this way, if the person or business is filing the appeal files for bankruptcy during the appeal proceedings, then the appeal bond will allow the winner of the case to be paid their full judgment.

To get an appeal bond, the party filing the appeal will need to contact a licensed surety bond expert. Collateral that is at least equal in value to the judgment will need to be secured and a premium payment made to the bonding agency before the bond is issued.

 

How long does an Appeal Bond remain valid?

The bond will stay in effect until the court releases the defendant once the case has been settled. If the appeal is lost, then the bond remains active until the judgment is paid in full as well as any additional fees and interest that have accrued. It can take several years for this to happen. Once all of these payments have been satisfied, the party will need to obtain a court-ordered release to prevent any more claims being made against that bond.

For non-renewal bond cancellations, the surety will immediately provide a notice of cancellation.

 

What is the cost of an Appeal Bond?

The cost of an Appeal Bond is determined on a case-by-case basis. Typically, the premium costs will fall between 1-3% if the total bond amount.  Appellants must have collateral that is valued at 100% to 200% of the judgment amount.  The amount of the bond may be increased to allow for payment of interest, appeal costs, and attorney fees. Some states may set a maximum amount for this surety bond.

Important note:  Appeal Surety Bonds do require full collateral. Forms of collateral accepted can be real estate, liquid assets (such as cash or liquid investments) or irrevocable letters of credit. If there is a tax lien on your personal credit report or the case involves family matters and foreclosures, sureties will not accept cash as collateral.

 

How do I get an Appeal Bond?

Select a surety bond company that is licensed to provide surety bonds in your state.  Filling out and submitting an application will be the initial first steps. The surety bond company will want to view summary documentation of the case. Sureties will also require financial statements from the applicant as proof that they are not near bankruptcy or that they have a substantial financial capacity to endure the judgment amount.

Requirements for the Appeal Bond may include, but not limited to:

  • Application form
  • Bond form obtained from the court
  • Notice of Appeal
  • Judgment (official order or ruling by the court)
  • Proposed collateral

As soon as you have submitted the requirements, the surety may find you eligible for the bond. You will receive an indemnity agreement to sign. Once done, the surety will issue the bond and send it to you!

If you are an appellant looking to reverse the decisions ruled by lower courts, you must post an Appeal Bond. To know more about this type of court bond, please feel free to contact us, and we can answer your questions.

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