Individual Surety Bonds

Surety Bonding

• The Basics
• Individual Bonds
• Federal & State Agencies

What is an individual surety bond?

An individual surety bond is a guarantee by an individual that an obligation will be met. The guarantee or bond is secured by the unencumbered pledged assets of the individual providing the guarantee (bond).

What types of obligations are involved in surety bonds?

The types of obligations that may be involved in a surety bond are a contractual committment, the payment of a debt or the performance of certain duties.

The pledged assets of the individual providing the bond must be sufficient to cover the bond obligations.

What assets are considered acceptable to provide an individual surety bond?

Acceptable assets for providing an individual surety bond are cash, certificates of deposit/cash equivalents with a federally insured financial institution, United States Government securities at market value, stocks and bonds actively traded on a national US security exchange, real property and irrevocable letters of credit issued by federally insured financial institutions.

If real property is used to provide an individual surety bond, what evidence should be provided to the obligee?

If real property is used to provide an individual surety bond, the individual surety should provide the obligee with a certificate of title prepared by a title insurance company. The title insurance company should be one approved by the United States Department of Justice.

How do pledged assets secure an individual surety bond?

A security interest in the pledged assets is given to the obligee. The security interest may be one or both of the following: an escrow account, a lien on real property.

Who executes an individual surety bond?

The individual acting as surety executes the individual surety bond.

Are any special forms used to execute an individual surety bond?

Yes. Individual surety bonds are executed using Standard Form 28.

Are individual surety bonds accepted by the United States Government?

Yes. According to Federal Acquisition Regulation 28.203(a), individual surety bonds are accepted by the United States Government for all bonds except position schedule bonds.

Are all individual sureties accepted by the United States Government?

Bonds from individual sureties included on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs, are not accepted by the United States Government.

For what reasons might an individual be excluded from acting as a surety on a contract with the United States Government?

An individual might be excluded from acting as a surety on a contract with the United States Government for any of the following causes: failure to fulfill obligations under a bond, failure to disclose all bond obligations, misrepresentation of the value of available assets or outstanding liabilities, false or misleading statements, signatures or represemtations on a bond or affadavit of individual suretyship, any serious and compelling cause that is determined to warrant exclusion.