How Much Does a Supersedeas Bond Typically Cost

When a person loses a case in court and wants to appeal, they may need supersedeas bonds. It is actually an assurance to pay the court if the appeal fails. How much, though? Let's make this simple so you can see what it is, why they need them, and how much it costs.

What Are Supersedeas Bonds?

A supersedeas bond is a court bond that you use in appealing a court ruling. If your case was lost, then you might be required to pay money to the other party as the court dictates. To appeal is to ask that a higher court decide the ruling. But if you want to delay payment until the higher court rules on the case, then you typically need to get this bond. It guarantees the court case winner, and as such, you will be reimbursed your money if the appeal fails. It is a guarantee to the court system.

Supersedeas bond rates differ depending on some aspects, like the value of money in the suit and the conditions in your state. Let us explain what makes up the rate and how it functions.

Factors That Affect the Cost of Supersedeas Bonds

The price of a supersedeas bond is not determinable and relies on several key factors. The following is what determines it:

1. The Judgment Amount: The biggest part is how much you must pay to the court. The bond is usually 100% to 150% of that. If you owe $50,000, the bond would probably be $50,000 to $75,000. What the court is trying to make sure of is that there will be enough to pay if you lose the appeal.

2. Premium Rates: You do not write a check for the amount of the bond. Instead, you pay a percentage, or a premium, to a bond issuer company. The premium is 1% to 2% of the bond, though more in a high-risk case. So, on a $50,000 bond, you would pay $500 to $1,000 as a premium.

3. Your Financial Situation: Bond companies take into account your credit history and record. If you have a very good credit position, you will be charged a lower premium. However, if your credit is not so good, the company can charge more because you are perceived as a higher risk.

4. State Rules: Different state legislatures have different appeal bond requirements. While some states require the bond to be greater than the judgment, others permit a smaller amount under certain circumstances. For example, in Texas, 100% of the judgment and interest, and in California, 150%.

5. Collateral: Collateral, property, or cash is also required by some bonding companies to back the bond. This will not decrease the premium itself but will make it more difficult for you to get the bond without property to provide.

Why Do Supersedeas Bonds Cost So Much?

You can't help but wonder why these bonds cost so much. This is because they're based on what you owe in the case, and that could be thousands or even millions of dollars. The bond company is taking on some risk by standing behind that money, so they charge a premium to balance it out. Furthermore, the court needs to protect the prevailing party; hence, they lodged the bond with a high amount to settle the entire judgment plus any other fee, including interest or lawyer's fees.

For example, let's say you have to post a bond of $120,000 for an obligation of $100,000 you owe, and the premium is 1.5%. You'd have to pay the bonding company $1,800. That's expensive, perhaps, but much less than having to come up with the entire $100,000 in cash upfront before you can proceed with your appeal.

How to Get an Appeal Bond Affordably

If you’re worried about the cost of an appeal bond, there are ways to make it more affordable:

• Shop Around: Different bond companies charge different rates. Compare a few to find the best deal.

• Improve Your Credit: A better credit score can lower your premium. Pay off debts and fix any errors on your credit report before applying.

• Talk to Your Lawyer: Your lawyer may have a way of lowering the value of the bond, such as requesting the court to set a lower bond in extraordinary situations.

• Check State Options: Some states have options other than a bond, such as paying the court in cash. Discuss this with your lawyer.

Are There Any Hidden Costs?

In addition to the premium, there may be additional fees to take into account. There are bond companies where you must pay an application fee or pay another person to do paperwork via an attorney. If the appeal takes a long time to come, you can be asked to renew the bond, which might entail paying back the premium. And if the appeal is denied and you are not able to pay the judgment, the bond company will pay but will charge you for it, plus additional fees. So, it's best to have the whole story before buying a bond.

Final Thoughts

In short, the price of supersedeas bonds varies with the judgment amount, your credit rating, state regulations, and the rates of the bond company. Although the premium is only 1% to 2% of the bond, the bond amount can be huge since it is calculated based on the judgment of the court. By understanding what drives the cost and how you might save, you can simplify the process. If your appeal is pending, sit down with an attorney and a reputable bond officer so that you can understand your expenses clearly. You will not have to lose sleep over money while dealing with your appeal.