2.3 Professional Bondsman Security Deposits

The outline's qualification item for the bondsman points to 114CSR103-3.2, which includes the professional bondsman's deposit in 3.2.3. The deposit rules themselves sit in section 8 (financial responsibility) and section 9 (cash held in trust). This is the most calculation-heavy topic on the exam.

What a professional bondsman pledges

Under 114CSR103-2.9 and 3.2.3, the professional bondsman deposits cash or approved securities with the Commissioner:

With the deposit, the bondsman also delivers a power of attorney or assignment on an approved form, executed and acknowledged, that authorizes the sale or transfer of the securities (8.5). This is the OIC's notarized Form D.

The OIC's 2022 general-information guidance also lists annuities among acceptable forms. The current rule text lists cash, irrevocable letters of credit, insurer-issued bonds and real estate. When answering exam questions, rely on the rule's list.

The minimum deposit: one-tenth, never less than $10,000

114CSR103-8.1 says each professional bondsman shall, unless real estate is the security, maintain approved securities with the Commissioner of at least one-tenth of all bonds written in West Virginia on which he or she is absolutely or conditionally liable as of the first day of the current month. The deposit is reconciled monthly and must never be less than $10,000. 114CSR103-3.2.3.a repeats the $10,000 floor for the initial application.

$$\text{Required deposit} = \max\left(\text{\textdollar}10{,}000,\ \tfrac{1}{10} \times \text{outstanding liability on the 1st}\right)$$

Read the table the other way to find bonding capacity. A $10,000 deposit supports up to $100,000 of outstanding liability. A $25,000 deposit supports $250,000.

Single-bond limit

114CSR103-5.9: no single bond may obligate the bondsman for more than one-half of the bondsman's maximum bonding authority.

Worked example. A professional bondsman has $30,000 on deposit, so maximum aggregate authority is 10 × $30,000 = $300,000. The largest single bond allowed is ½ × $300,000 = $150,000, even if current liability is low.

Real estate: the 2024 cut-off and the five-times rule

• W.Va. Code §51-10-1 and 114CSR103-3.2.3.c.3: a pledge of real estate as approved security is not permitted after July 1, 2024.
• Grandfathering: a bondsman licensed as of July 1, 2024 who had pledged real estate may continue using it until the license is voluntarily surrendered or revoked.
• For grandfathered real estate, aggregate bonds may not exceed five times the unencumbered, current assessed value as determined by the county assessor (8.2). The Commissioner is not liable beyond that value.
• Real estate must be in West Virginia and unencumbered at least to the required minimum (2.10). The bondsman may not sell, convey, mortgage or encumber it without the Commissioner's written approval (3.2.3.c.1). A Notice of Bond Encumbrance is recorded with the county commission clerk at the licensee's expense (3.2.3.c.2).

Worked example. A grandfathered bondsman's pledged land has an unencumbered assessed value of $40,000. Aggregate bonds secured by it may not exceed 5 × $40,000 = $200,000.

Changing the limits: 114CSR103-8.3

A professional bondsman may apply to increase aggregate authority above the 8.1 and 8.2 limits without additional security. The Commissioner decides case by case, considering special circumstances, license history and financial responsibility. Any increase may be temporary or permanent. The Commissioner may also decrease authority below the limits for financial irresponsibility. A denial of an increase, or any decrease, can be challenged at a hearing under §§33-2-12 and 33-2-13.

Deficiencies: 114CSR103-8.6 and 8.7

If the deposit falls below the requirement for any reason:

1. Within 10 working days, deposit more securities or reduce the excess bond liability.
2. Until cured, the bondsman may not sign, endorse, execute or become surety on any additional bail bonds, or post any security in lieu of a bail bond.
3. If not cured within 10 working days, the license shall be suspended pending a hearing.
4. The Commissioner may deny renewal if a deficiency remains uncured at renewal (8.7).

How the deposit is used and returned

• The deposit is a reserve for forfeitures held in safekeeping by the Commissioner. It is used only if the bondsman fails to pay an order and judgment of forfeiture after proper notice, or if the license is revoked (8.8).
• Cash security sits in the Bail Bondsmen Cash Security Fund, held in trust for holders of the bondsman's bonds. One bondsman's cash is never used for another's liabilities (9.1, 9.2).
• A pro rata portion is returned when the deposit exceeds the requirement. All of it is returned once the bondsman's bond obligations are satisfied or arranged (8.9).
• If two or more bondsmen write one bond together, the penalty is prorated equally or by participation (8.4).

Exam traps

• One-tenth with a $10,000 floor, reconciled on the first day of each month.
• Five times assessed value applies only to grandfathered real estate.
• Ten working days to cure a deficiency. No new bonds may be written in the meantime.
• Half of maximum authority caps any single bond.