Once bail has been set – either by the jail or a judge – the next step is coming up with either the full amount (in the case of a cash bail) or 10% (when using a bail bondsman). The remaining 90% of the bail face amount must be secured by collateral, to ensure the bondsman can cover the bail if the defendant fails to appear. The concept behind bail collateral is to provide additional liquid assets in exchange for the surety bond.
The initial 10% premium is a fee paid to the bond company in exchange for its guarantee to the court that the defendant will appear as ordered. The premium is considered fully earned and nonrefundable once the bail agency has posted the bond on behalf of the defendant.
Forms of Collateral
Collateral can be in the form of additional cash, a credit card payment, mortgage deeds on real property or unimproved land, business equipment, automobile titles, jewelry, assignments on paper assets such as stock certificates or bank accounts, letters of credit, or any other saleable possession of value. Some unusual forms of collateral have been an oil well (1987 in Oklahoma) and a church (2010 in Queens, NY).
All collateral is surrendered to the bail company until the defendant makes all the required court appearances and the bail is exonerated. Titles, certificates and deeds are held in trust by the bail company (rather than the actual vehicle or other large item being held), while smaller items like jewelry are generally secured in a safety deposit box or vault. Before collateral can be returned, any outstanding payments on the premium must be paid.
Whomever puts up the premium and collateral for the bond is called the indemnitor; this may be the accused themselves, or a friend or family member. The indemnitor would remain responsible for the full bail amount if there is a failure to appear for all ordered court appearances.
What happens to my collateral if the defendant fails to appear?
Collateral is basically a security deposit, to ensure the bail company will not have financial loss. If the accused fails to appear, the collateral is of course at risk. However, chances are usually excellent that the defendant is going to be found, arrested and brought back in front of the judge within an allotted time limit. If the timeframe is not met, bail may be forfeited and the full amount becomes due and payable to the court. As the indemnitor you would be given a chance to turn the collateral property into cash, especially when the value exceeds the bail.
Keep in mind that the bonding company is in business only to secure the release of the defendant and ensure their appearance in court on the date ordered. The bail agent doesn’t want your property, and would incur expenses moving forward to claim it. All efforts are put toward finding the defendant (with your assistance) and returning him or her to the court; once this occurs, the collateral would be released back to you.