What Are California Appeal Bonds?

If you were a party to a civil suit and want to challenge the lower court’s judgment in a higher court, you may be required to obtain a California court appeal bond to stay enforcement of the lower court’s judgment. An appeal bond / supersedeas bond / appellate bond is a type of Surety bond that guarantees that the judgment will be paid in full if the higher court upholds the lower court’s decision. The cost of an appeal bond varies by the type of collateral given.

Why Do Courts Require Appellants to Get Appeal Bonds?

Every citizen can approach a higher court requesting it to reverse the decision passed by a lower court. However, many people misuse this right and file a frivolous appeal in a higher court just to delay paying a judgment. This can lead to additional legal fees and expenses to the judgment creditor and wastes the court’s resources.

To discourage this dishonest behavior, courts require appellants challenging a lower court’s decision to get an appeal bond. In order to obtain an appeal bond in California, the appellant must pay the premium amount and pledge collateral with the Surety. The cost of an appeal bond discourages abuse of the appellate system.

Types of Collateral Accepted

Companies that issue appeal bonds accept various types of collateral such as:

• Marketable securities such as stocks and bonds held in non-retirement accounts, exchange-traded funds, mutual funds, and money market funds. If you offer marketable securities as collateral, the Surety will want to review your financial statements to determine the exact market value of your holdings. Depending on the types of securities offered, Sureties will extend Surety credit on a basis lower than their current market values.

• Cash: One benefit of pledging cash collateral is that a bond can be written very quickly – the same day in many cases! Sureties also offer interest on cash deposits

• Real Estate / Real Property as Bond collateral: Currently, only a handful of Surety companies will accept real estate collateral. If you plan to offer real estate as collateral, expect to pay a higher premium and for there to be additional expenses, but as interest rates creep higher, giving real property as bond collateral can be more cost effective than obtaining a mortgage in order to pledge cash collateral.

• Letters of Credit: A letter of credit is a promise by a bank to pay the beneficiary, in this case: the Surety bond company, a specified sum of money upon demand. Pledging a letter of credit to secure an appeal bond is a great way to speed up the process of issuing the bond. Principals who have established relationships with their bank can obtain their letter of credit as soon as within 1-2 weeks of filing a request.

Is Every Appellant Required to Get an Appeal Bond?

In California, appeal bonds are required in most civil lawsuits in which the judge directed the losing party to pay a hefty sum. Not all appellants, however, need to obtain appeal bonds. When you file your appeal, the court will let you know if you are required to get an appeal bond.

H.M. Vreeland is a trusted Surety bond company in California. We offer a range of Surety bonds under one roof. To make an appointment with one of our experts, call (415) 566-3401.