Understanding The Common Probate And Court Surety Bonds In Canada

The Canadian court system often receives a bad reputation, due to its inability to operate rapidly. What consumers fail to realize is that the system works better than it could. In fact, the system could easily be brought to a grinding halt, if the requirement for surety bonds were dropped all together. The Canadian courts utilize surety bonds frequently for a handful of different reasons. Whether you’re dealing with the death of a loved one or wish to become someone’s guardian, you’ll most likely be required to obtain and submit bonds. Additional details will be provided below.

Appeal Bond

The Appeal bond isn’t the most common, but some Canadians will stumble across a situation, which requires them to obtain this type of surety bond. As the name implies, the bond is utilized, when the individual in question wishes to make a court appeal. It is required by the court and puts measures in place to protect other parties from potential losses. This is the case, because the appeal bond guarantees that the principal will pay the sum of the original judgment, if they lose the appeal.

appeal and conjunction surety bond

The Injunction Bond

The injunction bond is incredibly important and helps to protect those that have been wrongfully accused by another. This is a type of surety bond, which will cover all damages the defendant suffers, if the court determines that the plaintiff’s lawsuit is wrongful. Suffice to say, it is the plaintiff’s responsibility acquire the bond and submit it to the court. This must be completed, before they’ll be able to officially bring their case to the court.

Who Does A Probate Bond Protect?

Death is inevitable and can occur without a moment’s notice, leaving family members emotionally, physically, and financially devastated. Sometimes an heir or beneficiary will be mentally or physically capacitated, making it very difficult for them to manage an estate or trust. In this case, the heir or court will appoint a fiduciary to perform the duties and oversee the estate. This gets a little risky, especially when a large sum of money is involved. In order to reduce these risks, the court will require the fiduciary to post a probate bond.

This type of SURETY BOND is designed to protect the beneficiary from financial loss, in the event of incompetent and dishonest behavior, displayed by the fiduciary.

What Is A Probate Bond?

probate bondsA probate bond is a type of surety bond that acts as an insurance to protect heirs from fraud. It genuinely is not uncommon for a trustee or financial advisor to become caught up in their duties. When this occurs, money is often involved. Embezzlement is considered a criminalistics activity that involves the unlawful use of someone else’s assets. The probate bond will protect the estate and if at any time, the court finds the fiduciary guilty of such behavior. A claim will be filed with the bond company and the estate will be awarded the full amount of the bond.

When this occurs, the surety will go after the fiduciary and make them repay the loss.

Guardianship Bond

There are many situations, which will require a Canadian resident to acquire a guardianship bond. Generally, this surety bond is utilized, when someone wants the court to appoint him or her as the guardian of another individual. This can happen, due to the third party’s age or an illness or accident, which has left them incapable of caring for his or her own finances and assets. In this type of scenario, the bond protects the said third party, which will also be classified as the obligee. This individual will receive protection from malicious behavior on behalf of their new guardian.

Bankruptcy Bonds

As the title suggests, these bonds are utilized, when a person or company files for bankruptcy. Within this type of surety bond, one individual will be designated at the trustee. This person will become responsible for negotiation between the debtor and their creditors. If you become a trustee, you will be required to abide by the rules of the bond and serve both parties to the best of your abilities, while also obeying all bankruptcy laws.

Overall

Truly, the Canadian surety market is incredibly diverse. There are numerous bonds and each one of these products will serve a purpose. You may initially be against the ideal of spending money on a bond, but you need to understand that the bond is there to provide protection to all parties involved. Once you’ve digested this information, you will agree that it is well worth the minute cost.

Surety Bonds – What exactly are they?

Surety Bonds are required by businesses in order to bid, qualify, or execute a certain project. In Canada, it is common for construction companies, travel agencies, warehouses, and exporters to obtain a surety bond. Below you will read about what exactly a surety bond is and who is involved in a surety contract. If you need more information, click here.

Surety Bonds is a type of contract between three parties.construction surety bond

The three parties are:

1. Principle – Person who owns a business that purchases the bonds for their work.

2. Oblige – are the entity that require the bonds from the principle. They normally are government agencies.

3. Surety – is the insurance company that provides the company with the bonds.

The surety guarantees the oblige that the principle will follow the terms of the bond. If the principle does not follow the terms and condition of the bond, the oblige could claim to recover there loses. The surety company might have to pay some of it by honoring the bond as well.

Who needs it?

Surety Bonds are required by businesses and professional who provide services to consumers. There are two different types of bonding categories, commercial bonds and contract bonds.

1. Commercial bonds are used for business owners, entrepreneurs and other working professionals. Commercial bonds ensure that people will do their job according to licensing laws and others rules and regulations. For example: auto dealers, travel agents and more.contractor surety bond in canada

2. Contract Bonds are used to obtain a guarantee from construction professionals that they must follow the rules and standards when they work on a construction project. They ensure that the project will complete on time and up to expectations.

Cost of a surety bond?

The Surety bonds are dependent on three factors:

1. Credit score

2. Companies financial

3. The project price

For Businesses, Surety companies do not want to give bonds to someone with a bad financial history. The surety bond company asks for the business owner’s personal credit score and net worth because credit provides an indication of the person ability to pay their debts on time and net worth shows an individuals financial strength. Someone with a bad credit could also get the approval by the surety company but the only difference is that the price for them may be higher then with someone with a good credit.