This bond may also be referred to as a Legal Document Assistant Bond, Tax Preparer Bond, Legal Document Preparer Bond, or Legal Doc/Tax Preparer Bond
What is a surety bond, and why do I need one for my Document Preparation Service?
A surety bond is a three-way agreement between a Principal (the Document Preparation Service), an Obligee (Nevada Secretary of State), and a surety company (the company backing the bond). A surety bond does not function like an insurance policy for the Principal; instead, it acts as a protective measure for the Obligee and the Nevada public. A surety bond is a guarantee that the Principal understands and agrees to comply with all rules, regulations, laws, and guidelines pertaining to their business, in this case as a Document Preparation Service. Per the Nevada Secretary of State, this bond provides:
(a) Indemnification to a client or any other person who is determined in an action or proceeding to have suffered damage as a result of:
- An act or omission of the registrant, or an agent or employee of the registrant, which violates a provision of this chapter or a regulation or order adopted or issued pursuant thereto;
- A wrongful failure or refusal by the registrant, or an agent or employee of the registrant, to provide services in accordance with a contract entered into pursuant to NRS 240A.190;
- The fraud, dishonesty, negligence or other wrongful conduct of the registrant or an agent or employee of the registrant; or
- An act or omission of the registrant in violation of any other federal or state law for which the return of fees, an award of damages or the imposition of sanctions have been awarded by a court of competent jurisdiction in this State; or
(b) Payment to the Secretary of State for any civil penalty or award of attorney’s fees or costs of suit owing and unpaid by the registrant to the Secretary of State pursuant to this chapter.
The entirety of the bond requirements can be found in NRS 240A.190.
In lieu of this $50,000 surety bond, the Document Preparation Service may choose to deposit a $50,000 cash bond with the Secretary of State to function as the same form of protection for clients as the bond. A surety bond does not cost the Principal the full bond amount. The cost of this bond depends on credit score, but are generally between 1-3% of the bond’s total amount. In certain circumstances, the cost could be upwards of 9%. Submit your application for a free quote.
In the event that the Principal violates the terms of their bond, a claim will be filed against it, at which point the surety will make payments to the damaged party, or Secretary of State. The Principal will then be obligated to repay all damages to the surety, including any associated fees or penalties. In addition to repayment, the surety may revoke the bond, at which point the Document Preparation Service must cease business operations until a new surety bond or cash bond are filed. It is important that you, your employees, representatives, and agents understand your terms very clearly to avoid any claims. A history of claims will complicate all future bond applications, as a claim is a mark against your “credit” in the bond market.