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Surety Bonds in California

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While surety bonds are generally the same in concept, they cover different areas of vulnerability. In fact, there would be no need of them if a party in an agreement was not in danger of losing something if another party failed in his or her duties. Although most of the bonds required in California are also required elsewhere in the United States (and the world as well), there are some that are associated more closely with California’s needs and restrictions.

Occupational Licenses and Commercial Bonds

There are many licenses required by the State of California, and carry requirements for posting bonds. These bonds protect the public from the errors or unscrupulous practices of people working or doing business in California.California’s Immigration Consultant License and Bond is one example.The state’s Immigration Consultants Act demands that anyone who claims to be an immigration consultant must post a bond of $50,000 with the Secretary of State. This protects the clients of a consultant who acts in a fraudulent manner or does not provide what the client paid for. If the consultant has not posted a bond, he or she does not have a license to provide immigration services. In 2004, the California attorney general shut down three Sacramento immigration consultants’ offices for failure to post the bond. The clients would have had no recourse or protection if the company had taken their money and then shut their doors. Although there are exceptions—for licensed attorneys and non-profit consultants—these consultants were neither.Another example is the Talent Agency Bond, which is required at almost all levels of government. It ensures payment to the people it represents when the agency receives payment for the work, and covers damages due to fraud, deceit, misrepresentations or misstatements. In 2005 Governor Schwarzenegger signed SB 184, a bill that increased bonding amounts for talent agencies. The last increase was in 1986, and only to $10,000. Governor Schwarzenegger increased the amount to $50,000. The reasoning was that there are often many people being represented by an agency, and if the agency fails to pay them, each individual share of the $10,000 bond was quite minimal.

Subdivision Bonds

Also known as Improvement Surety Bonds, these popular bonds in California, and usually required at the city and county levels. These guarantee installation, restoration, and/or preservation of the public structures (like streets, sidewalks, curbs, etc.) and property when owners of commercial or residential properties build improvements. In California, you likely will not get a building permit without posting a Subdivision Bond.

There are several layers of subdivision bonds in California. Monument bonds cover marking and surveying; tax bonds cover property taxes based on improved land values; performance bonds guarantee that the construction is in accordance with local regulations and will be completed on time; payment bonds ensure that the suppliers and workers will be paid; and maintenance bonds—usually good for one year—guarantee that the property owner will maintain the improvements at his or her expense.

The subdivision bond helps guarantee the creation and preservation of a city’s property and infrastructure, as well as its own improvements, while controlling community development. These common areas are crucial to functioning city utilities and offices, as well as beautification and parks. In this way, they are like a public works bond, although public works bonds are generally broader in scope and includes many other performance bonds that the subdivision bond doesn’t.

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