Pennsylvania State Board of Auctioneer Examiners Surety Bond Requirements

The Pennsylvania State Board of Auctioneer Examiners requires surety bonds in order for businesses or individuals in the auctioneering sector to obtain a license. Below is a list of the surety bonds relating to the Pennsylvania auctioneering industry and some basic facts about each. Two helpful resources for finding businesses or individuals in the industry who need bonds are the Pennsylvania Licensing System Verification and the Pennsylvania Auctioneers Association Auctioneer websites.

  • Trading Assistant
    • Bond Amount: $5,000
    • Bond Premium: $175 to $435
    • Required for: obtaining an active Trading Assistant License
    • Cancellation Period: 60 Days
  • Special License Applicant
    • Bond Amount: $5,000
    • Bond Premium: $175 to $435
    • Required for: obtaining an active Special Auctioneer License
    • Cancellation Period: 60 Days
  • Auctioneer
    • Bond Amount: $5,000
    • Bond Premium: $175 to $435
    • Required for: obtaining an active Auctioneer License
    • Cancellation Period: 60 Days
  • Auction House
    • Bond Amount: $5,000
    • Bond Premium: $175 to $435
    • Required for: obtaining an active Auctioneer House License
    • Cancellation Period: 60 Days
  • Auction Company
    • Bond Amount: $5,000
    • Bond Premium: $175 to $435
    • Required for: obtaining an active Auction Company License
  • Apprentice
    • Bond Amount: $5,000
    • Bond Premium: $175 to $435
    • Required for: obtaining an active Auctioneer Apprentice License
    • Cancellation Period: 60 Days

Impacts of COVID-19 on the Surety Industry: Surety Bonds Essential Businesses Still Need

Local, state, and federal stay-at-home orders have a huge impact on the surety industry. Numerous articles have been popping up addressing the effects of COVID-19 on the contract surety industry. What about the commercial and court bonds? Understanding what business industries are deemed essential and the bond requirements can better prepare carriers, agents, and brokers to adapt to the volatile reality that is living through a pandemic. Numerous state and local governments are quickly adapting to electronic licensing procedures, meaning that various license requirements are not exempt during the current pandemic.

essential critical infrastructure workers

Source: Essential Critical Infrastructures defined by the CISA

On March 28th, the U.S. Department of Homeland Security, Cybersecurity & Infrastructure Security Agency has produced an advisory list of essential critical infrastructures which can be found here. The purpose of this list is to give state and local officials guidance when establishing what constitutes essential infrastructure in hopes of softening the impacts of COVID-19 to the overall health, safety and economy of our nation.

Bonds relevant to these essential infrastructure sectors may include:

  • Agricultural bonds
  • Appraisal Management Company Bonds
  • Bid bonds
  • Cannabis Bonds
  • Conservatorship Bonds
  • Contractor’s Bond of Qualifying Individual
  • Contractor’s License Bonds
  • Department of Defense Hauling Bonds
  • Driver Training School Bonds
  • Executor Bonds
  • Excise Tax Bonds
  • Farm Labor Contractor Bonds
  • Freight Broker Bonds
  • Healthcare Administration Bonds
  • Home Healthcare Agency Bonds
  • Investment Advisor Bonds
  • Immigration Consultant Bonds
  • Insurance Agent/Surplus Lines Bonds
  • Liquor/Beer Tax Bonds
  • LLC Employee Worker Bond
  • Lost Securities Bonds
  • Lottery Bond
  • Marijuana Excise Tax Bond
  • Medicaid Provider Bond
  • Money Transmitter Bonds
  • Mortgage Broker Bonds
  • Motor Vehicle Dealership Bonds
  • Oil and Gas industry bonds
  • Performance and Payment Bonds
  • Probate bonds
  • Public Official Bonds
  • Sales Tax Bonds
  • Site Development Bonds
  • Telemarketing/Professional Fundraiser Bonds
  • Third-Party Debt Collector Surety Bond
  • Title Agent Bonds
  • S. Customs Bonds
  • Utility Deposit Bonds
  • Wage, Welfare and Fringe Benefit Bonds
  • Weighmaster Bonds

COVID-19 Pandemic Sparks Innovation in the Surety Industry

On Monday, April 6th, 2020 the Surety & Fidelity Association of America (SFAA) and the National Association of Surety Bond Producers (NASBP) issued a joint Request for Emergency Action to federal, state, and local municipalities to accept the electronic execution and delivery of commercial and contract surety bonds.  Many contract surety bonds still require raised seals, which can be a challenge given the current pandemic requiring many in the surety industry to work remotely.

It is imperative to adopt a new standard that allows for the electronic execution of bonds, as many construction projects are infrastructure related to health and safety. The joint request memo urges officials to adopt the following:

  1. With respect to all construction bonds, public procurement officials shall accept all bonds and powers of attorney containing e-signatures and e-corporate seals affixed to each document, and waive the notary requirement.
  2. With respect to all commercial surety bonds, government officials shall accept all bonds and powers of attorney containing e-signatures and e-corporate seals affixed to each document, and waive the notary requirement.

Numerous sureties have quickly adapted to the current pandemic by creating electronic powers of attorney and electronic seals. Software programs have also enabled contractors to submit bid proposals online, with electronic bid bonds. Many license and permit bond requirements have evolved in recent years to allow for electronic execution.

The SFAA and the NASBP have combined their resources to create an immediate request for the adaptation of electronic execution of surety bonds. The joint request has addressed federal and state laws FAR 28.106-1 & GSAR 528.2020 and requested that they are amended to accommodate the current pandemic. If amended this would promote a more conducive and efficient method of bond executions that would be beneficial in the current crisis. This would also mark a significant adaptation in the surety industry. Shipping costs would be eliminated, overhead costs would be reduced and overall efficiency would create a more streamlined process of purchasing bonds.

Force Majeure and Contract Bond Claims Due to COVID-19 Impacts

Impacts stemming from COVID-19 are felt in every aspect of life. The surety industry is no different. Different types of surety bonds will be affected in different ways. Understanding the indirect effects of how COVID-19 affects the contract surety industry can help surety carriers, surety producers, and contractors mitigate risks and soften the blow.

Numerous articles have popped up outlining how Force Majeure clauses may be utilized for project delays leading to potential surety claims related to the COVID-19 pandemic. Force Majeure is a contract clause that excuses the performance of a construction contract due to uncontrollable events. Not all construction contracts will contain a Force Majeure clause covering COVID-19 or viruses. The most common performance and payment bond form from the American Institute of Architects outlines delays and extensions of time in their Performance and Payment bond form (AIA Document A201-2007) in Article 8, section 3.1.

Force Majeure is not a “cure-all” that sureties and contractors can rely on to keep from being responsible for bond claims resulting from completion date delays due to COVID-19 impacts. Force Majeure clauses may not exist in all performance and payment bond form language. It’s also possible that contract amendments removing force majeure clauses may have been removed if mutually agreed upon prior to signing a contract. There’s also Burden of Proof that comes into play where it must be proven that is impacts from COVID-19 have made completing the project impossible, not impractical or unprofitable.

Alternative Solutions Outside of Force Majeure

There are several options beyond Force Majeure. First, open communication between all parties, including the project owner, general contractor, suppliers, vendors, subcontractors, and sureties is essential. Always consider renegotiations and change orders when it comes to the initial parties involved. Next, there is the Good Faith Attempt to Perform and other regulations that can be used, below:

  • The Doctrine of Impossibility/Impracticability – 30 Williston on Contracts § 77:31 (4th ed.) that states:

“A contracting party has no duty to perform an obligation in the agreement if performance is rendered impossible or impracticable, through no fault of its own, because of a fact that existed at the time when a contract was made and about which this party neither knew nor had reason to know, and the nonexistence of which was a basic assumption of the parties’ agreement.”

  • Default under Federal Contracts – FAR § 52.249‐10‐ Default that reads:

“(b) The Contractor’s right to proceed shall not be terminated nor the Contractor charged with damages under this clause, if ‐ (1) The delay in completing the work arises from unforeseeable causes beyond the control and without the fault or negligence of the Contractor. Examples of such causes include (i) acts of God or of the public enemy, (ii) acts of the Government in either its sovereign or contractual capacity, (iii) acts of another Contractor in the performance of a contract with the Government, (iv) fires, (v) floods, (vi) epidemics, (vii) quarantine restrictions, (viii) strikes, (ix) freight embargoes, (x) unusually severe weather, or (xi) delays of subcontractors or suppliers at any tier arising from unforeseeable causes beyond the control and without the fault or negligence of both the Contractor and the subcontractors or suppliers; and…”

  • Excusable delays involving federal contracts – FAR § 52.249‐14 states:

(a) Except for defaults of subcontractors at any tier, the Contractor shall not be in default because of any failure to perform this contract under its terms if the failure arises from causes beyond the control and without the fault or negligence of the Contractor. Examples of these causes are (1) acts of God or of the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe weather. In each instance, the failure to perform must be beyond the control and without the fault or negligence of the Contractor. Default includes failure to make progress in the work so as to endanger performance….”

Construction is currently considered an essential business by the majority of states, as this industry is a driving force in the economic health of our country. This does not apply to all states and local jurisdictions, and may change from day to day. Construction is even considered an exemption under the California Executive Order N-33-20. Being deemed an essential business exempt from executive stay-at-home orders does not shield the construction industry from the impacts of COVID-19. If a bonded project comes to a halt, sureties may face claims due to delayed completion of projects. Now is the time to be proactive and have those difficult conversations.

California Wholesale Motor Vehicle Dealer Bonds

A $10,000 Surety Bond of Motorcycle Dealer, Motorcycle Lessor-Retailer, ATV Dealer or Wholesale –Only Dealer (Vehicle Code Sections 11612, 11710 and 11710.1) is different than the $50,000 California Dealer Bond (Vehicle Code Section 11710) mentioned in the previous post.

Key differences are the nature of the dealership, the bond amount, and the number of vehicles sold. This bond covers motorcycles dealers or lessors, wholesale vehicle dealers, and ATV dealers with sales of less than 25 vehicles a year. The premium ranges from $100 to $2,500 based on the principal’s credit. The CA Wholesale MVD is not always required to be renewed after the first year.

The three parties of a California Motor Vehicle Dealers Bond:

  • Obligee: State of California Department of Motor Vehicles – Licensing Operations Division, Occupational Licensing Branch, P.O. Box 932342, MS:L224, Sacramento, CA 94232-3420
  • Principal: The Wholesale Motor Vehicle Dealer
  • Surety: The Surety Company

Targeting Dealers

The State of California maintains a list of all vehicle dealerships in an online database that is free and open to the public. Utilize the website to search by city to find all registered dealerships in a specific area that may need services with shopping rates for their surety bond.

Helpful Links

California Motor Vehicle Dealer Bonds

Did you know every car dealer in California is required to have a California Motor Vehicle Dealers Bond for $50,000 in order to maintain or obtain a business license? The Surety Division team at AAU: Allied American Underwriters can assist with a marketing strategy to target these bonds, including how to get a leads list. More information about Vehicle Dealerships licensing requirements can be found on the California Department of Motor Vehicles website.

California Motor Vehicle Dealer Bond Details

The bond protects the Obligee (State of California DMV) by transferring the cost of ensuring the public is compensated for damages resulting from a licensed business breaking licensing laws to a surety bond company. This bond must be issued by an insurance carrier admitted by the Department of Insurance. The Motor Vehicle Dealer Bond should not be confused with the Wholesale Dealer bond, required for wholesale motor vehicle dealers in the amount of $10,000.

The three parties of a California Motor Vehicle Dealers Bond:

  • Obligee: State of California Department of Motor Vehicles – Licensing Operations Division, Occupational Licensing Branch, P.O. Box 932342, MS:L224, Sacramento, CA 94232-3420
  • Principal: The Motor Vehicle Dealer
  • Surety: The Surety Company

Targeting Dealers

  • Use the How To Find CA Dealerships – Bond sheet to obtain a list of dealer contacts.
  • In order to obtain their license, all new dealers must attend a class. Contacting the business who offers the educational course may lead to a steady stream of bond applicants.