Lost Instrument Bonds
Executive Bond Services represents excellent surety markets that underwrite Lost Instrument bonds. There are two primary types of lost instrument bonds: Fixed Penalty bonds and Open Penalty bonds.
Fixed Penalty bonds are used for instruments that have a fixed, non-fluctuating value. Good examples are: lost certified checks, and lost cooperative stock certificates (whose value is frequently based upon the sale price of the cooperative unit). These bonds have a lower rate than Open Penalty bonds and are somewhat easier to underwrite.
Open Penalty bonds do not have a specific penalty because their value fluctuates depending upon movement in the market in which the lost financial instruments are traded. Prime examples of these instruments are: stock certificates (excluding cooperatives certificates), and negotiable bonds. These surety bonds are more difficult to underwrite than Fixed Penalty bonds because, depending upon the market, the amount of the surety's liability at the time of loss may substantially exceed the value of the lost instrument when the bond was written and premium charged. Sureties charge premium as a percentage of the market value of the lost instrument when the bond application is approved and written.
A relatively new area of lost instrument surety that we underwrite is a Fixed Penalty bond allowing for the replacement of lost cooperative certificates and/or proprietary leases. These bonds indemnify Cooperatives, Managing Agents for the Coopertive, Attorneys for the Cooperative and sometimes, the buyer of the unit, in the event that those parties suffer a loss after the lost certificate and/or proprietary lease is re-issued. Surety losses result when the cooperative certificate is used as collateral for a loan or otherwise is hypothecated to a third party without the Cooperative's knowledge, and when the owner or a party in possession of the certificate and/or proprietary lease commits fraud. Lost cooperative certificate bonds should be seriously considered to protect the financial interests of the Cooperative, Managing Agent, Attorneys and the buyer of a cooperative unit before the parties issue a replacement stock certificate and/or proprietary lease.
Waiver of Probate bonds may be utilized when the owner of a lost cooperative certificate has died and the individual charged with responsibility for reclaiming the estate asset is not appointed the fiduciary of the estate by the Court having jurisdiction. The Waiver of Probate bond indemnifies the party that re-issues the lost instrument when it is determined the claimant was not authorized to claim the asset on behalf of the estate. This saves the claimant the cost involved in becoming appointed the estate's fiduciary and the time needed to secure that fiduciary standing. More importantly, it protects the parties re-issuing the certificate.
We look forward to working with you to secure lost instrument bonds. As with every bond we write, we will streamline the underwriting process and seek to expedite the issuance of the bond.