DAR File No. 27558

Insurance, Administration

R590-196

Bail Bond Surety Fee Standards, Collateral Standards, and Disclosure Form

NOTICE OF PROPOSED RULE

DAR File No.: 27558
Filed: 11/24/2004, 11:51
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

As a result of previous form filings received by the department that included late fees, which are currently not allowed as they are not considered an actual charge, the department decided to change the rule to allow for the charging of late fees on delinquent periodic payments.

Summary of the rule or change:

A change is being proposed to Section R590-196-4, which allows for a late charge on a payment plan of $20 or 5% of the periodic payment, whichever is less. The rule also adds a new Enforcement Date section (Section R590-196-9) allowing 45 days from the effective date of this change before enforcement begins.

State statutory or constitutional authorization for this rule:

Section 31A-35-104

Anticipated cost or savings to:

the state budget:

This change will create no change in the general fund. Those bail bond agencies who adopt the late fee will have to file with the department a revised disclosure form including the new information about the late fee. Since there are only 36 bail bond agencies and all may not adopt this fee, the additional work of reviewing these forms will be minimal and no additional help to do so will be needed.

local governments:

Since the only main change deals with a late fee that is not taxed, this change should have no effect on local government.

other persons:

This change will allow bail bond agents and agencies to charge a late fee of $20 or 5% of the periodic payment, whichever is less, on their payment plans. As a consequence, those purchasing bail bonds under a payment plan may be affected. The charge of a late fee would be considered a common practice in the business world.

Compliance costs for affected persons:

This change will allow bail bond agents and agencies to charge a late fee of $20 or 5% of the periodic payment, whichever is less, on their payment plans. As a consequence, those purchasing bail bonds under a payment plan may be affected. The charge of a late fee would be considered a common practice in the business world.

Comments by the department head on the fiscal impact the rule may have on businesses:

The addition of a late fee to this rule will have little financial impact on the industry of 36 agencies except to help them encourage consumers to pay on time.

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Direct questions regarding this rule to:

Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at jwhitby@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

01/14/2005

This rule may become effective on:

01/17/2005

Authorized by:

Jilene Whitby, Information Specialist

RULE TEXT

R590. Insurance, Administration.

R590-196. Bail Bond Surety Fee Standards, Collateral Standards, and Disclosure Form.

R590-196-1. Purpose.

This rule establishes uniform fee and collateral standards for bail bond surety business in the State of Utah.

R590-196-2. Authority.

This rule is promulgated pursuant to Section 31A-35-104 which requires the commissioner to adopt by rule standards of conduct for bail bond surety business.

R590-196-3. Scope and Applicability.

This rule applies to any person engaged in bail bond surety business.

R590-196-4. Fee Standards.

(1) Initial bail bond fees.

(a) Bail bond premium:

(i) minimum fee: none;

(ii) maximum fee: not to exceed 20% of bond amount.

(b) Document preparation fee may not exceed $20 per set of forms pertaining to one bail bond.

(c) Credit card fee may not exceed 5% of the amount charged to the credit card.

(2) Other fees.

(a) These fees are limited to actual and reasonable expenses incurred by the bail bond surety because:

(i) the defendant fails to appear before the court at any designated dates and times;

(ii) the defendant fails to comply with the court order; or

(iii) the defendant or the co-signer fails to comply with the terms of the bail bond agreement and any promissory notes pertaining to that agreement.

(b) Reasonable expense fee for mileage is the Internal Revenue Service standard for business mileage.

(c) Apprehension expenses such as meals, lodging, commercial travel, communications, whether or not the defendant is apprehended, are limited to actual expenses incurred and must be reasonable, i.e., meals at mid-range restaurants, lodging at mid-range hotels, commercial travel in coach class, etc.

(d) Reasonable collateral expense fees:

(i) actual expenses to obtain collateral; and

(ii) storage expenses if in a secured storage area, limited to actual expenses.

(e) A late payment fee of $20 or 5% of the delinquent periodic payment which ever is less.

R590-196-5. Collateral Standards.

(1) Collateral may be provided to secure bail bond fees, the face amount of the bail bond issued, or both.

(2) If the bail bond surety accepts the same collateral to secure the bail bond fees and the face amount of the bail bond issued, then, in the event of a failure to pay bail bond fees when due, the collateral may not be converted until the bail bond is exonerated or judgment entered against the surety and the depositor has been given no less than 15 days to pay any bond fees owing.

(3) If the bail bond surety accepts different collateral to secure the bail bond fee and the face amount of the bail bond issued then:

(i) the collateral securing the bail bond fees may not be converted until payment has been defaulted under the terms of the promissory note for those fees, and the depositor of the collateral has been given no less than 15 days to make the required payment;

(ii) the collateral securing the face amount of the bail bond issued may not be converted until the bond is exonerated or judgment entered against the surety and the depositor of the collateral has been given no less than 15 days to reimburse the bail bond surety for any amounts owed to the bail bond surety.

(4) The bail bond surety, its agents taking possession of collateral, or both, will hold said collateral as a fiduciary until such time as ownership of the collateral passes to the bail bond surety.

(5) Collateral held as a fiduciary may not be used by the bail bond surety or its agents without the specific written permission of the depositor of the collateral.

(6) Should proceeds from converted collateral exceed the outstanding balance due, the bail bond surety will return the excess to the depositor of the collateral.

(7) Notice under the rule shall be deemed proper if it is sent via first class mail to the address provided by the depositor of the collateral.

R590-196-6. Disclosure Form.

The bail bond surety and its agents will use the following disclosure form or a form that contains similar language.

TABLE

XYZ Bail Bonds Disclosure Form

1234 South 1234 East, Salt Lake City, UT 84444:

801-123-4567 fax: 801-098-7654



Defendant.......................Co-Signer......................

Court...........................Charge.........................

Bond amount $...................Bond number....................

Initial Fees, non-refundable.

....bond premium, maximum: no more than 20%;

    minimum: none.                                      $......

....document preparation, not to exceed $20

    per set of bond forms.                              $......

....credit card fee, not to exceed 5% of amount

    charged to credit card                              $......

                                   total
initial fees   $......



Additional Fees.

     Limited to actual and reasonable expenses required 

because the defendant fails to appear before the court at any

designated times, or fails to comply with the court order, or 

fails to comply with the terms of the bail bond agreement or 

any promissory notes pertaining to that agreement.  The 

following are some reasonable expense fees:

     (1)  reasonable expense fee for mileage is IRS mileage 

reimbursement standard for business miles;

     (2)  reasonable apprehension expense fees include meals 

at mid-range restaurants, lodging at mid-range hotels, 

transportation at no more than coach fares; and

     (3)  reasonable collateral expense fees: actual expenses 

to obtain collateral and, actual storage expenses, if 

collateral is in a secured storage area.

     (4)  A late payment fee of $20 or 5% of the delinquent 

periodic payment which ever is less.



Grounds for revocation of bond.

     Should the defendant violate any of the following, the 

defendant shall be subject to immediate bond revocation and the 

defendant, or the co-signer, or both, shall be subject to all 

the costs incurred to return the defendant to the court. 

Grounds for revocation include the following:

     (a)  the defendant or co-signer providing materially false 

information on bail bond application;

     (b)  the court's increasing the amount of bail beyond 

sound underwriting criteria employed by the bail bond agent or 

bail bond surety;

     (c)  a material and detrimental change in the collateral 

posted by the defendant or one acting on defendant's behalf;

     (d)  the defendant changes their address or telephone 

number or employer without giving reasonable notice to the bail 

bond agent or bail bond surety;

     (e)  the defendant is arrested for another crime, other than 

a minor traffic violation, while on bail;

     (f)  the defendant is back in jail in any jurisdiction and 

revocations can be served prior to the defendant being released;

     (g)  failure by the defendant to appear in court at any 

appointed times;

     (h)  finding of guilt against the defendant by a court of 

competent jurisdiction;

     (i)  a request by the co-signer based on reasons (a) 

through (h) above.  Items (a) through (h) pertain to the 

defendant; items (a), (c), (e) (g) and (i) pertain to 

co-signers, if any.



Collateral.

     The following has been given as collateral to guarantee 

all court appearances of the defendant until the bond is 

exonerated:

................................................................

................................................................

............................

     The following has been given as
collateral to guarantee payment of bond fees:

................................................................

.............

     In the event judgment is entered against the surety or the 

bonding fee is not paid according to the terms of the bail bond 

agreement and its promissory note, if any, following written 

notice to the undersigned of such judgment or non-payment, the 

undersigned authorize XYZ Bail Bonds to convert the appropriate 

collateral to collect the judgment or the unpaid bond fees.  

Should proceeds from the sale of the appropriate collateral be 

insufficient to cover the outstanding balance due, the 

defendant, the co-signer, or both, agree to be personally liable 

for the difference.  Should proceeds from the sale exceed the 

outstanding balance, the difference will be returned to the 

depositor of the collateral.  The depositor's signature below 

constitutes acknowledgment of a Bill of Sale for the 

collateral.  The depositor accepts this agreement as a bill 

of sale for the collateral.



     By signing below I certify that I have read and understand 

this disclosure form, the bail bond agreement and its attached 

promissory note, if any.  I certify under penalty of perjury 

that all information given to XYZ Bail Bonds verbally and in 

writing on all documents relevant to this bond are true and

accurate. The co-signer agrees that should the co-signer request 

XYZ Bail Bonds to revoke the defendant's bond, with or without 

probable cause, the co-signer will be responsible to pay XYZ 

Bail Bonds and their agents for the time returning the defendant 

to jail at the rates stated above in additional fees.  If 

requested by the co-signer to revoke the bond without probable 

cause, the co-signer will be responsible to reimburse the 

defendant his bond fees.



Date..............................Defendant....................

Date..............................Co-signer....................

Date..............................Depositor....................

I,......................................., agent of XYZ Bail 

Bonds, certify that I have given a copy of all documents 

pertaining to this bail bond agreement to the defendant, the 

co-signer, the depositor, or any of the above, at the time and 

date said bail bond agreement was executed.

Date....................Bail Bond Agent........................

R590-196-7. Penalties.

Violations of this rule are punishable pursuant to Section 31A-2-308.

R590-196-8. Severability.

If any provision or clause of this rule or its application to any person or situation is held invalid, such invalidity shall not affect any other provision or application of this rule which can be given effect without the invalid provision or application, and to this and the provisions of this rule are declared to be severable.

R590-196-9. Enforcement Date.

The commissioner will begin enforcing the revised provision of this rule 45 days from the rule's effective date.

KEY: insurance

[June 8, 2000]2005

31A-35-104

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at jwhitby@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.