Appeal Bonds Explained

When a person loses a case and wants to challenge the decision in a higher appeals court, the court requires them to get an appeal bond. Also known as a supersedeas bond, an appeal bond secures the owner the right to appeal and stay a judgment.

What is an Appeal Bond?

An appeal bond guarantees that the appellate is able to commit to the final ruling if the judgment is upheld against them. An appeal bond can be used to cover interest and other costs the appellant incurs during the appeal process. Its value can be significantly higher than the court-mandated sum.

How Much Does an Appeal Bond Cost?

In most cases, to qualify for an appeal bond, the applicant must post collateral worth 100% of the bond amount plus, a % of the bond amount as premium, depending on the type of collateral given. Large corporations or individuals who are able to demonstrate strong financial health are typically not required to post collateral.

Why Do Courts Require Appellants to Obtain a Supersedeas Bond?

Many people appeal to a higher court in order to delay the enforcement of judgment. The main objective of an appeal bond is to prevent the abuse of the appellate system. It discourages defendants from filing frivolous appeals that can waste the judgment creditor and court’s time and money.

A supersedeas bond serves the best interest of both parties – the defendant and the plaintiff. The appellant does not have to pay the lower court-mandated amount until the appellate court decides the case. They pay only if the appellate court upholds the decision made by the lower court. For the plaintiff, an appeal bond provides peace of mind. It assures payment if the court rules in their favor.

What Type of Collateral Can Be Used to Secure an Appeal Bond?

Different types of collateral that sureties commonly accept include cash, marketable securities including stocks and bonds held in non-retirement accounts, letters of credit from banks, and real property.

Cash

Many people argue that one must post cash with the court instead of obtaining an appeal bond. What they fail to realize is that many sureties pay interest on cash deposits, whereas courts pay little to no interest. Some courts even charge for cash deposits and their timeframes for returning the collateral can be much longer than with a Surety company.

If time is of the essence, cash can be used to secure an appeal bond quickly. An appeal bond is usually in place within a few days after a wire transfer is made to the Surety.

Marketable Securities

High quality stocks, mutual funds, bonds, and exchange traded funds and money market funds held in a non-retirement account can be used as collateral to obtain an appeal bond. When marketable securities are used, the surety requires the most recent account statement so they can review the holdings.

Letters of Credit

Surety companies accept letters of credit as collateral from banks approved by them. There are several benefits of using a letter of credit as collateral. Appellants with a good relationship with their bank can often obtain a letter of credit within 1-2 weeks or sooner.

Real Property

If significant equity is available in real property, some Sureties will allow the Property, itself, to collateralize an appeal bond. Real property collateralization bears a higher premium, but in the absence of other available collateral, it can serve as a great option.

Need an appeal bond in Florida? Let H.M. Vreeland help. We are committed to helping businesses and individuals make informed decisions when choosing the type of bond that fits their needs. To learn more, call (407) 504-2741.