Wednesday, March 7, 2012

Which States Require AMCs to Post Surety Bonds?

This post is dated 3/7/12.  Bond requirements are continually evolving.  Please contact LIA with questions if you may need a bond.

The following states currently require AMCs (and some appraisal firms falling under a state's definition of AMC) to carry valid surety bonds:
  • Arizona:  $20,000
  • Arkansas:  $20,000
  • Georgia:  $20,000
  • Kentucky:  $25,000
  • Missouri:  $25,000
  • Nebraska:  $25,000
  • New Mexico:  $25,000
  • Oregon:  $25,000
  • Tennessee:  $20,000
  • Washington:  $25,000
The following states have legislation pending that may soon require AMCs to carry surety bonds:
  • Alabama:  $25,000
  • Illinois:  $25,000
  • Massachusetts:  $20,000
  • Pennsylvania:  $20,000
  • South Carolina:  $25,000
LIA provides bonds in all states with no handling fees.  Bond applications are available on LIA’s website at  Because a bond is a guaranty of the AMC's payment of potential fines or other debts covered by the bond, an application requires detailed financial information.

Interestingly, an AMC contacted us recently to ask if they could obtain a bond in a much larger amount than a state's minimum.  The reason for the request was that the AMC wanted or needed to provide a lender client with assurance that the AMC would pay the appraisers retained to provide appraisals for that lender.  Essentially, the AMC is holding the lender's money between the time it receives funds from the lender and pays the appraiser, and if the AMC fails to pay the appraiser, the lender is still on the hook to appraisers for those payments.  Thus, a bond written in a sufficient amount could provide the lender with security that it will not be hurt by the AMC's failure to deliver payments to appraisers.  A bond like this can be written, but it is not the same bond as the AMC's state surety bond.