Also known as:surety bond · surety-bond · surety-bonds · surety · performance bond · payment bond
Written by attorneys · grounded in primary & secondary sources — see below
A contractual instrument in which a surety promises to answer for the debt or default of a principal obligor to a third-party obligee. The surety's obligation arises only upon the principal's failure to perform and is secondary to the principal's primary duty.
Sources & Authorities
How it applies
Common Examples
6
Discovery Request Targets Surety Files
Sterling Dynamics faces a contract suit and its surety has prepared internal risk assessments and correspondence anticipating litigation. The opposing party moves to compel production of those materials. The court denies the motion because the documents were created by the surety in anticipation of litigation.
Surety Bond Enforced After Default
Silverline Industries obtains a performance bond from a corporate surety to guarantee completion of a construction project for Stonehaven Properties. When Silverline defaults, Stonehaven demands payment from the surety. The surety must honor the bond and then pursue Silverline for reimbursement.
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Statutes
Federal Rules
Uniform Acts
Restatements
Hornbooks
Study Supplements
Hartford Fire Insurance Co. v. California509 U.S. 764, 817, 113 S.Ct. 2891, 125 L.Ed.2d 612 (1998)
Mortgage Assumption Triggers Surety Status
Sophia Singh sells mortgaged property to Scott Summers who expressly assumes the note. The lender later modifies the loan terms with Summers without Singh's consent. Singh asserts a suretyship defense that discharges her personal liability on the original obligation.
Comunale v. Traders & General Ins. Co.50 Cal. 2d 658
Bail Surety Seeks Exoneration
Samantha Stone posts a surety bond for Stephen Shaw's release pending trial. Shaw fails to appear and the court forfeits the bond. Stone surrenders Shaw into custody and moves to set aside the forfeiture under applicable procedural rules.
United States v. Bailey444 U.S. 394 (1980)
Willful Violation Involves Surety Bond
Spencer Silver structures financial transactions to avoid reporting requirements while using a surety bond to secure performance. Prosecutors must prove he knew his conduct violated the law before imposing criminal liability on the bond-related scheme.
Ratzlaf v. United States510 U.S. 135, 141, 114 S.Ct. 655, 659, 126 L.Ed.2d 615 (1994)
Initial Appearance Triggers Surety Duties
Sasha Stone serves as surety on a criminal appearance bond for a defendant. At the first appearance the court reviews the surety's qualifications and assets. The surety submits to the court's jurisdiction and accepts service through the clerk for any later enforcement proceedings.
Rothgery v. Gillespie County, Texas554 U.S. 191, 207 (2008)
Common questions
Frequently Asked
3
When does a mortgage assumption turn the original borrower into a surety?+
An express assumption by the buyer shifts primary liability to the buyer and places the original borrower in a secondary or surety position. The original borrower remains personally liable to the lender unless the lender expressly releases the borrower or a suretyship defense applies.
Does a material modification of the loan by the lender and assuming buyer discharge the original borrower?+
Yes. When the lender and assuming grantee enter a material modification that increases the surety's risk without the original borrower's consent, suretyship principles discharge the original borrower from personal liability.
What must a buyer promise to create an enforceable assumption of a mortgage?+
The buyer must promise to perform the obligation secured by the mortgage. The promise may run to the seller or the lender and need not use the word assume if its substance is to bear the debt.
410 U.S. 113 (1973)Constitutional Law
…history of the Fourteenth Amendment in its reliance on the "compelling state interest" test. See Weber v. Aetna Casualty & Surety Co. , 406 U. S. 164, 179 (1972) (dissenting opinion). But the Court adds a new wrinkle to this test by transposing it from the legal considerations associated with the Equal Protection…