Understanding Bail Bonds 1

BAIL 101
By Jerry Watson, AIA Chief Legal Officer
INTRODUCTION
This paper is designed and written for people who are new to the bail bond business or are established and have little training on the subject of bail could also benefit from this material.
This article is intended to be neither scholarly nor impressive. Its sole purpose is to present, in the simplest terms information to assist a person new to the bail bond business familiarity and knowledge regarding the bail bond business.
DEFINITIONS
Here we will cite some key bail bond terms, an adequate understanding of which is absolutely necessary to accomplish our purpose. Pay careful attention and be sure to use this section as a reference because any misunderstanding later on is going to operate as a hindrance when attempting to fully comprehend the information that follows.
The following are the key terms and their definitions:
•Bail: The security necessary to be put up with the court in order for a person who has been arrested to be released from custody.
Example: Bill Smith is pulled over by a police officer for driving recklessly. During the course of his investigation, the officer can see that Bill is intoxicated and a Breathalyzer confirms this. Bill is subsequently arrested and booked at the local jail. He is then taken before a judicial officer (a judge or a magistrate) where he is advised that his “bail” is set at $10,000.00. Now for Bill to get out of jail, a person who has been pre-approved to provide such services must come down to the jail and put up the acceptable security in the amount of $10,000.00. This is “bail.”
•Defendant. A person against whom an action is brought. In this case, it is Bill.
•Bail Bond. A one-page written contract promising to pay the bail amount if the defendant does not come back to court when he is supposed to.
•Surety. The insurance company approved to put up the bail bonds to get defendants released from jail.
In Bill’s case, the state gets $10,000.00 if Bill doesn’t come to court and the surety is the entity promising to pay that amount to the state if Bill doesn’t show.
•Bail Agent. The person who goes to the jail and physically puts up the bail bond in order to get Bill released.

This person must be licensed by the state to perform such a service. The bail agent also operates under contract with the surety and for their services the bail agent receives a portion of what Bill pays to get his bond posted.
•Power of Attorney. A written document attached to the bail bond (by the bail agent) that communicates to the court as well as the local authorities that the bail agent reserves the right to present the bail bond to the jail and sign the surety’s name to that bail bond.
Remember, the bail bond is a written contract between the surety and the state and – to legally bind the surety – it must be signed by the surety or someone authorized to sign for the surety. The power of attorney is proof that the bail agent has the proper authority to bind the surety, making it the responsible party on the promise to pay.
•Forfeiture. An order from the court that is drawn up when the defendant misses his scheduled court appearance.
This order means that the bail bond is no longer in effect. Bill is not in custody, but he is no longer authorized to not be in custody because his bail bond is no longer active. Now Bill has an open warrant for his arrest because now he is a fugitive.
•Fugitive. A person who is not in custody, but is supposed to be.
•Fugitive Recovery Person. A person responsible for locating the fugitive defendant and bringing them back to custody.
This person does not have to be an actual peace officer.
A bail agent has the right to apprehend the fugitive and surrender him back into custody themselves or can do so by contracting a third party person to fulfill the fugitive warrant. These third party fugitive recovery persons are often called “bounty hunters” because traditionally they take a percentage (usually 10%) of the amount of the bond for apprehending and surrendering the defendant back into custody.
•Motion to Set Forfeiture Aside. A formal document filed with the court by the surety’s attorney. It is an attempt to convince the court that it should not make the surety pay the entire bail amount because the defendant had a very good excuse for not being in court when he was supposed to be.
Maybe Bill had an automobile accident on his way to court. Maybe Bill was taken to the hospital the night before with a ruptured appendix. Maybe Bill had been picked up for drunk driving yet another time and was in jail in another county. Maybe Bill is dead. There can be all kinds of reasons, some of them quite legitimate, as to why Bill missed his court date. The surety therefore would want the court to set the forfeiture aside.
Many states have different procedures regarding these types of actions and a seasoned bail agent can explain these very well for the jurisdiction in which they operate.
•Indemnitor. A person who co-signs someone else’s note, promising to pay should the borrower fail to honor the agreement. The indemnitor is also known as the “co-signer.”

In the bail bond business, an indemnitor signs an agreement at the time the bail bond is made. The indemnitor’s signature signifies a promise that if the defendant fails to appear and the bail has to be paid, then they as the acting co-signer will pay that bond loss.
Besides granting a bail agent the necessary guarantee needed to get the bond made, an indemnitor can also be a good friend to have as they will usually assist the bail agent wherever needed because they do not want to suffer any financial loss.
•Collateral. The actual security put up by the indemnitor to be used if the defendant fails to appear and the surety is called upon to pay the bond loss.
Full or partial collateral is generally taken on all large bonds (approximately $10,000.00 and over) and many bail agents require collateral to support the indemnitor’s promise on smaller bonds. Collateral may be in the form of cash or some tangible item, such as real estate, jewelry, stocks, bonds, or titles to chattel such as boats, trucks or automobiles.
For example: Let’s say Bill doesn’t appear on his $10,000.00 bond, the bond is then forfeited and the full $10,000.00 bail must be paid by the surety. Let’s also say that Bill’s uncle was an indemnitor on the bond and he put up a $5,000.00 certificate of deposit to partially secure the full $10,000.00 risk. The $5,000.00 would be used, and Bill’s uncle, as the indemnitor, would be responsible for the remaining $5,000.00 bail payment.
•Bail Agent Indemnitor. Bail agents are also liable as indemnitors, under their written contract with the surety, promising to pay the bond loss if there is one.
The idea is for the surety to never have to pay on a bail bond because the surety gets a very small percentage of what the bail agent collects from writing the bond. Since the bail agent takes the majority of the money, the bail agent takes all of the risk and stands to lose whatever he cannot collect from the indemnitor.
So, the bail agent is protected against loss by the indemnitor and the surety is protected against loss by the indemnitor and the bail agent indemnitor.
•Premium. A small percentage of money the bail agent pays to the surety.
•Build-Up Fund. A smaller percentage of money (less than the premium) that is also paid by the bail agent to the surety to further guarantee the surety in the event the surety is called upon to pay the bond loss.
For example: For every $1,000.00 worth of bond liability the bail agent writes on the surety, the bail agent will pay the surety $20.00 (2% of the bond amount) as premium. The bail agent would also pay the surety a smaller amount; say $10.00 (1% of the bond amount) as build-up fund. This build-up fund actually belongs to the bail agent, but the surety holds it and has the right to use it to prevent the surety from having to pay a loss itself.
•Bond Report. A written report sent by the bail agent to the surety, detailing what business the bail agent wrote on the surety during that reporting period.
The bail agent follows up with a check for the surety’s premium and another check for the build-up fund. When the surety gets this report, it immediately sends the bail agent a replacement supply of the powers of attorney that the bail agent used in writing the bonds reflected on the report.
This concludes the key definitions used in the bail bond business.

A good comprehension of these terms is the first step toward understanding the ins and outs of bail.