California Lost Instrument Bonds
Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all your California lost instrument bond needs.
What Are They?
How many times have you lost something valuable and wished you had a way to replace it without losing money in the process? While it may not happen frequently, there is the possibility of losing a financial instrument that could perhaps be converted into cash by someone who found it—for example, a stock or bond certificate, a cashier’s check, a certified check made out to you, or a certificate of deposit.
What would happen if you obtained a replacement from the party that issued that instrument, and someone later cashed in the original that you had lost? It wouldn’t be you that suffered a financial loss—it would be the transfer agent, securities firm, or other entity that issued the replacement that loses out.
That’s why such California entities require a lost instrument surety bond before they will issue a replacement for a missing redeemable financial instrument. A California lost instrument bond provides a way for the issuer of the replacement instrument to be compensated for any loss that results from having issued the replacement.
A special kind of surety bond, a reconveyance surety bond, is required when the lost instrument is a promissory note or deed involved in a real estate transaction.
Who Needs Them?
Anyone requesting replacement of a lost redeemable instrument in California is likely to be required to purchase a lost instrument surety bond. Depending on the specific instrument to be replaced, the required bond amount may be dictated by the issuer (fixed penalty) or may fluctuate with changes in the value of the lost certificate at the time it is redeemed (if it is redeemed at all).
If you are told that you must purchase a lost instrument bond, it most likely will be for a single one-year term. The issuer will make any and all bonding requirements clear at the time a replacement instrument is requested.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
The surety bond agreement dictating the terms of a lost instrument bond is a legally binding contract between three parties:
- The issuer of the replacement instrument requiring the lost instrument bond is referred to as the “obligee.”
- The party requesting a replacement instrument who must purchase the bond is called the “principal.”
- The surety company underwriting and approving the bond is known simply as the “surety.”
Issuing a lost instrument bond establishes a line of credit that will be used to compensate the obligee if a valid claim is filed against the bond because the original instrument was redeemed.
The surety will tap that line of credit to pay the claim on behalf of the principal. But it’s the principal that is legally responsible for claims and must reimburse the surety in full.
What Do They Cost?
The cost of a California lost instrument bond depends on the required bond amount. A fixed penalty bond for $5,000 or less is usually sold for a flat cost, typically $100. That flat amount goes up incrementally for bonds above $5,000—typically by $100 for each additional $1,000.
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Our surety bond professionals will get you the California lost instrument bond you need at a competitive rate.