Bail Bonds Collateral
Bail Bonds collateral can come in many forms. Bail Bonds Collateral is considered a form of Security. Collateral is property or something of value that “secures” the payment of a loan. Normally, collateral must equal in value of the size of the loan someone is seeking. The most common form of collateral is Real Property or Real Estate. If someone wants to sign for a $50,000 bail bond, they must provide collateral equaling $50,000. This is usually done in the for of equity in a house owned by either the defendant or indemnitor.
Types of Security (Collateral)
Personal Property Collateral
- Cash: the most simple of collateral is to just provide cash equaling the amount of loan needed. The form of cash accepted is; actual cash, money orders, or cashier checks. The reason some people use cash as collateral is that they would rather someone else risk the amount of the bail bonds then themselves. A normal bail bond is backed by the Bail Bonds Company and also by the Sureity (Insurance Company) that the bail bondsman is working with.
- Automobile or Mobile Home: In order to use these types of vehicles for collateral they require DMV pink slips. Meaning, vehicles must be fully owned by the person who is putting the vehicle up for collateral. Mobile homes have to have the pink slip but also need to comply with Code for repossession and liquidation. Obisously its still up to the bail bondsman to decide whether or not the collateral has any value.
- Stocks and Bonds: They must have the certificates to prove value and access to the stocks and bonds.
- Businesses: There must be a strict compliance with UCCI Code. There must also be a Record of Financing statement with the State of California. This type of collateral might take a while to be evaluated. Normally a 3rd party accountant will analyze the business and its profit and loss statements and liquid cash on hand.
- Personal Property: this can be difficult to establish value for. Similar scenarios happen at Pawn Shops all over the world. Its rare for a bail bondsman to take personal property because storage is a big factor. Even if they have enough storage, they would have to figure out how to sell all the objects which to anyone is a real pain.
Real Property Collateral
- Residential: Real Estate is the most popular of collateral used in the bail bonds industry. All property that is placed for collateal must have enough equity in them equal to the total bail amount. i.e. a $350k house that has $25,000 worth of equity in it usually can only be used as collateral for a $25K bail bond. But this can also be left up to the bail bondsman and their assessment of the property.
- varies for single family and multi-family houseing
- realiable appraisal information readily available
- easy to sell
- less likely to forfeit
- provides possible real estate investment opportunities
- Commercial and Industrial:
- relates to business property, offices, shopping centers, stores, theaters, hotels, parking facilities, factories and manufacturing
- Commercial property can be difficult to value and also to resell. Bail Bondsman who deal with commercial real estate for collateral usually have a background dealing with it on its own or solicit specialists to help evaluate collateral deals.
- farms, timberland, pasture land, ranches and orchards
- again, these can be difficult to assess value and are also fairly difficult to sell. It always depends on the current real estate market.
Collateral Continued in Next article