When Are Appeal Bonds Filed and Stays Go into Effect

If you’re involved in a civil lawsuit and wish to challenge the lower court’s ruling in a higher court, you may need to obtain an appeal surety bond in California to temporarily stay or delay the execution of the lower court’s judgment.

Also known as a supersedeas bond, or an appellate bond, an appeal bond is a type of surety bond that guarantees payment of the judgment in full if the higher court affirms the lower court’s decision. The cost of an appeal bond depends on the type of collateral provided.

How does an Appeal Bond Work?

If the defendant in a case loses and refuses to pay the judgment, the opposing party can file a claim against their appeal bond. Once a claim is filed, the surety conducts an investigation to verify its legitimacy. If the surety is satisfied, they inform the defendant and ask them to settle the claim. In case the person does not respond to the surety’s request, they take care of the claim. After the claim is settled, the surety recovers the payable amount, plus interest and expenses, from the principal.

What Purpose do Appeal Bonds Serve?

Every individual has the right to appeal a judgment in a higher court. Many people misuse this right to delay the enforcement of a judgment. Instead of respecting the court’s ruling and paying the judgment, they file frivolous appeals in higher courts, wasting their resources. Appeal bonds deter this dishonest behavior, protecting courts against frivolous lawsuits, but, most importantly, they securitize the underlying judgment allowing use of assets that would otherwise be encumbered by an abstract of judgment.

When do Stays go into Effect?

Many people wonder when an appeal bond is filed and when does the stay go into effect. After the court passes a judgment, the plaintiff can enforce it unless the opposing party has obtained an appeal surety bond in California and a notice of appeal has been submitted.

Both the notice of appeal and the bond must be filed. If only one of the documents is submitted, the judgment won’t be stayed. The defendant has 30 days to file the notice of appeal (the sooner the better). People who need an immediate stay must prepare the notice of appeal in advance and have it ready for filing before the judgment is officially passed.

Defendants will also want to obtain a bond as soon as possible. If you want to stay a judgment, you likely have an idea of when the judgment will be passed, perhaps based on a proposed judgment. You may also have a pretty good idea of the judgment amount. This information can help the surety company speed up the underwriting process.

Is it Necessary for all Defendants who want to Challenge a Lower Court’s Ruling to Obtain a Surety Bond?

Not all defendants who want to appeal a lower court’s decision need an appeal surety bond. Courts decide whether a defendant should get an appeal surety bond. Your lawyer should be able to help you determine in advance if you need an appeal surety bond.

How can an Appeal Bond be Obtained?

First choose a surety company that is equipped to customize bonding solutions to their clients’ unique needs. Once you choose a surety, they will require you to fill out and submit an application form. The surety company will also ask you to provide a copy of the judgment, your bank and other financial statements, and the notice of appeal.

How Much Does an Appeal Bond Cost?

Appeal bonds carry a high risk for sureties, which is why they require principals to pledge collateral valued at least 100% of the bond amount. Appeal bond premiums depends on the surety and the type of collateral pledged.

The amount of appeal bonds can vary from one state to another depending on state regulations. In California, the bond amount must be 150% or 1.5 times the judgment amount. Sureties might consider issuing a bond without collateral to businesses or individuals with strong financial health.

You can pledge the following assets as collateral to obtain an appeal bond:

➢ Cash: A compelling reason to use cash as collateral to obtain an appeal bond is that many sureties pay interest (interest rates usually vary between 1 and 1.5 percent) on cash deposits
➢ Marketable securities: You can use mutual funds, stocks, and exchange traded funds held in your non-retirement account as collateral
➢ Real estate: People who want to use real estate as collateral must realize that there can be additional costs (other than bond premium) involved

Regardless of the type of surety bond you need, H.M. Vreeland has you covered. We have been helping businesses and individuals determine and obtain the right type of bond for their situation for more than 100 years. To learn more, call (415) 566-3401.