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Different types of bonds are used in the legal field, including municipal bonds, bail bonds, and appellate bonds. They secure obligations such as financing public projects, guaranteeing court appearances, and ensuring payment of judgments. Laws vary by jurisdiction.
There are many different types of bonds used in the legal arena. Some of the more common types of bonds include municipal bonds, surety bonds, and appellate bonds. The purpose of each of these types of bonds is to secure another person’s obligation, whether that obligation is to support a project, pay a judgment, or appear in court. In most cases, the laws of the national or local jurisdiction govern the different types of bonds, so their nature and requirements can differ from one area to another.
A municipal government bond is government-issued debt used to finance some sort of public improvement project, such as the rehabilitation or creation of roads, bridges, or sewage systems. Government entities eligible to issue municipal bonds include cities, towns, school districts, utility districts, or any type of local government entity. Many municipal bonds are general obligation bonds, which are issued when the government agency uses its credit to back up the bond, as derived from its taxing power. Unlike most bonds, there is no collateral pledged to back the bond. General obligation bonds are not dependent on any income from any improvement project for repayment.
An insurance company issues bail through a bail bondsman, which allows a defendant or person accused of a crime to be released before their trial in court. A bond guarantees the defendant’s appearance at subsequent hearings and trials. If the defendant subsequently fails to appear, the bail bondsmen must locate and produce the defendant, or the court will order the bail forfeited. In order to obtain security, a defendant typically must pay the guarantor no less than ten percent of the bond’s face value and sometimes requires the posting of additional collateral to secure the bond, such as real estate. Some jurisdictions refer to sureties as sureties.
A party who appeals a court judgment to a higher court often must file an appeal bond with the court. An appeal bond ensures or guarantees the performance of fiduciary duties in the event of an unsuccessful appeal. The theory behind the appeals bond is to ensure that the plaintiff can still recover the judgment payment, despite the failure of the appeal, even if the party owing the judgment becomes insolvent or the judgment otherwise becomes unenforceable. Like a bond, the amount of an appellate bond is set by a court. These types of obligations may differ from one jurisdiction to another and depend on local law.
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