Types of Bail Bond Collateral

18 Sep, 14

• in Bail Bonds

A bail bond is a loan made to a defendant by a third party to cover the cost of bail. Bail is set by a court to ensure a defendant’s appearance at trial. Like many loans, a bail bond can be secured by collateral which can be seized if the loan is not repaid.

Bail Bond Repayment

The only way a bail bond is repaid is if the defendant appears at trial. Once that occurs, bail is usually returned to the guarantor. If the defendant fails to appear, bail is usually revoked by the court, and the guarantor must seize the collateral to cover the bond.

Collateral

Collateral can take a number of forms. Generally, anything that is valued at or above the value of the bond can be used. Because of the amounts involved, a bail bond is most often secured by real property or real estate. Equity in a home or the title deed to a piece of property can be pledged in consideration of securing a bail bond and is held by the bond agent until bail is returned.

Cash is generally not pledged as collateral for a bond, since if cash is available, it can be used on its own as bail. Real property is more common because while it is usually valuable, by itself it cannot be used as a bail. A court of law generally has no mechanism for liquidating a real estate or real property.

Securities such as shares of stock, shares of a mutual fund or bonds with a sufficient face value can be pledged as collateral. Often because of the fluctuating value of securities, bail bond agents will want the value of the securities to exceed the bond by a considerable margin and will often include language in the bond agreement that additional equity or value may be requested in the event the value of the securities drops below a certain threshold. Insecurities agreements this is often referred to as a “covenant.”

Cars can be pledged as well, but since the property is usually held in trust by the bond agent until the defendant’s appearance and the adjournment of the trial, pledging a sole means of transportation is not usually a good idea. Also, the equity available in the average daily transportation vehicle is usually unlikely to cover anything but a trivial bail amount, and even then, there are often easier sources of collateral.

Aside from cars, cash, securities, and real property, generally speaking, anything that can be pawned can be pledged as collateral. In a pawn shop, jewelry is king, so that is usually the best place to start. Normally it will be necessary to have any non-liquid property appraised, but that is something that can often be handled directly by the bail agent on the defendant’s behalf.

As with any legal process, knowing all of the options and more importantly, why those options are available and how they affect future choices is key to evaluating the right steps to take. Bail bonds and collateral can be confusing, but ultimately understandable.

Read More: How do Bail Bonds Work? Do you get your money back?