Bond insurance: what it is, how it works and what the values ​​are

Bond insurance: what it is, how it works and what the values ​​are

If you work as a realtor, it is very important to know all the ways to make your client insured. And the surety bond is an option that benefits both the tenant and the future tenant.

When renting a property, numerous security measures are required to guarantee the rent payment. However, the most recommended option is the surety bond. This is because, in this modality, there is no need for a guarantor.

What is secured bond?

What is secured bond?

If you have questions about how secure bail insurance works, we’ll explain. Basically, it is a kind of “monthly fee” paid by the tenant who has no guarantor and whose function is to cover all possible costs that arise if the rent is not paid.

It also provides full coverage on possible expenses, damages to property, charges, fines and termination fees. In this post you will check how safe surety bonding works in practice.

Currently, there are several options to leave both the renter and the tenant insurance during the term of the contract. Each of them is ideal for one type of case, and because of this, it is necessary for the realtor to know all of them.

However, it is important to point out that the modality that best applies to the business being carried out must be chosen.

What forms of guarantee exist and how do they work?

What forms of guarantee exist and how do they work?

Bond insurance

In this modality, the tenant pays a monthly amount to the real estate agent responsible for intermediation with the lessee and, in case of non-payment of rent, it is used to cover all expenses that may arise.

Guarantor

The guarantor is nothing more than the person responsible for the expenses if a tenant does not honor the payment of rent. He must have a property removed in the same city of negotiation and have a monthly rent that can meet the rent.

Check bond for rent

This is also a great guarantee for those who want to rent a property. With the escrow check for rent, the tenant fills out a check and notes on the back that it is a security deposit. In this way, it will not be discounted immediately, only in case of non-compliance with the measures established in the lease agreement.

What is the value of a surety bond?

What is the value of a surety bond?

Many people wonder what the value of surety insurance is? Typically, it usually costs two to three times the value of a month’s rent.

However, this amount, other than the conventional rent guarantee check, is not paid at one time. It is divided into 12 installments which correspond to one year of contract. Therefore, it needs to be renewed annually because of adjustments that may arise.

However, although this option offers this monthly option, many tenants / renters choose to pay the rent at one time. In any case, it is up to the realtor or real estate agent to do this mediation and check if this alternative is advantageous and possible for all parties.

Advantages of Surety Insurance

Advantages of Surety Insurance

Since this modality should be good for both parties, let’s cite the advantages that the lessor and lessee have with it.

For the lessor

  • No need for a guarantor;
  • Prevents immediate disbursement of the surety bond;
  • More agility when approving the contract;
  • The amount can be paid in installments.

For Real Estate

  • Legal assistance of the insurer (if necessary);
  • The analysis of the registration is waived and is made by the insurer.

What documents do I need for surety insurance?

What documents do I need for surety insurance?

The documents required for surety insurance will depend on the type of renter and tenant. Individuals must present: CPF, RG, latest pay stub or the last three pay stubs and a copy of the Work Card.

If the person works as an independent or professional, it is necessary to present last year’s income tax, as well as the bank statement for the last three months.

However, if the individual has an MEI, both documents are required plus an individual signature statement. Pensioners and retirees also need to present the last paycheck in the case of civil servants and the INSS quarterly statement.

How much time does the real estate agent have to return the bond deposit?

How much time does the real estate agent have to return the bond deposit?

Currently, there is no law that determines a minimum or maximum time for real estate to return the deposit of the surety bond. Because of this, this period is generally established at the time of   preparation of the contract. Generally, this amount is returned approximately one month after the contract is closed.

It is important to emphasize, also, that many real estate companies do not reimburse this value. This is because it is not considered an investment, but a monthly expense like, for example, IPTU and condo fee. Because of this, it is essential to clarify this detail among the parties involved in the lease.

In addition, it is also necessary to establish the procedure for breach of contract by one of the parties. Generally speaking, the realtor needs to talk to the tenant and the tenant to establish all of these details, and thus avoid future problems, including legal action.

Bond insurance: an essential care

Bond insurance: an essential care

Ensuring that the client does not have headaches is one of the main functions of the realtor. Because of this, invest in one of the forms of insurance mentioned above. In this way, all parts of the negotiation will be fulfilled. 

Comments are closed.